Insight Magazine - Summer 2022

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By Mark J. Gilbert, CPA/PFS, MBA

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Pittelkow Kittner, CPA, CGMA, CITP, DTM

’sCPA

INSIGHTS FROM TODD SHAPIRO, ICPAS PRESIDENT & CEO @Todd_ICPAS

It’s All About Relevance

n a recent meeting with the Illinois CPA Society Board of Directors, a prominent accounting industry consultant noted that the number one thing business owners want from their CPAs is, effectively, help making their businesses more successful and profitable.

In another recent meeting I was in, someone asked, “What is the top long-term issue facing the CPA profession?” “Pipeline” is the most frequent response I hear in meeting after meeting with leaders in the profession and practitioners. Staffing and a declining pipeline of new CPAs are challenges that firms and companies are facing on a daily basis. Still, I propose that relevance is, in fact, the top issue facing the profession. Ensure relevance and we’ll solve the pipeline issue. The key question is, how do we ensure relevance?

We’re living in a world where technology is dramatically impacting and further commoditizing CPAs’ core compliance services of accounting, auditing, and tax preparation. There’s no question that these compliance services are still critical to businesses and the economy. But in an increasingly complex world, is that enough? Not according to Main Street business owners.

CPAs have maintained their unique position as being “the most trusted business advisors” for now; however, as those core services mentioned become further automated and commoditized, clients and companies are demanding more. CPAs need to move beyond reactively answering questions when their clients and companies pose them. If CPAs are to remain relevant, they need to meet the evolving and increasing needs of their clients and companies by providing proactive insight and strategic advice. As I’ve stated many times before, CPAs need to become “the most trusted and strategic business advisors.”

Adding “and strategic” to that moniker may seem subtle, but the difference is anything but. In this expanded role, one needs to think like the business owner, literally putting yourself in their shoes. It

requires you to think, proactively, about the businesses you serve and what drives their profitability. Transforming the CPA profession to be collectively viewed as strategic will require every CPA to adapt and develop new skill sets, new tool sets and, most importantly, new mindsets.

That brings me back to the pipeline. I believe that the declining number of new CPAs is the symptom, not the root cause, of the problem that exists. Students and young professionals overwhelmingly want to make a positive impact on society, and given the current employment situation, will seek fulfilling careers wherever they can accomplish that. I believe that embracing the role of being a strategic business advisor that focuses on helping businesses become more profitable and successful will make the CPA profession more attractive to those pursuing rewarding careers.

Relevance is, clearly, the number one issue facing the CPA profession. Moving now to become the most trusted and strategic business advisors will ensure CPAs’ relevance in an ever-changing business landscape. In turn, it will make this a more attractive profession to pursue. Will you embrace the challenge and transform yourself?

We’ll be discussing this transformation more during my keynote at ICPAS SUMMIT22 in late August. I’d love to see you there and hear your thoughts.

My theory: Becoming more relevant to businesses will make becoming a CPA more relevant to today’s career seekers.

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

Amy Sanchez

Creative Director Gene Levitan

Copy Editors

Mari Watts | Jennifer Schultz, CPA

Photography Derrick Lilly | iStock

Circulation

John McQuillan

ICPAS OFFICERS

Chairperson

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

Vice Chairperson

Jonathan W. Hauser, CPA | KPMG LLP

Secretary

Deborah K. Rood, CPA, MST | CNA Insurance

Treasurer

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

Immediate Past Chairperson

Thomas B. Murtagh, CPA, JD | FORVIS LLP

ICPAS BOARD OF DIRECTORS

John C. Bird, CPA | RSM US LLP

Brian J. Blaha, CPA | Wipfli LLP

Jennifer L. Cavanaugh, CPA | Grant Thornton LLP

Brian E. Daniell, CPA | West & Company LLC

Pedro A. Diaz De Leon, CPA, CFE | Accume Partners

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

Jennifer L. Goettler, CPA, CFE | Sikich LLP

Monica N. Harrison, CPA | Built In

Scott E. Hurwitz, CPA | Deloitte LLP (Retired)

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

Enrique Lopez, CPA | Lopez & Company CPAs Ltd.

Stella Marie Santos, CPA | Adelfia LLC

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

BACK ISSUES + REPRINTS

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

ADVERTISING

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 © 2022. 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.

LEGISLATIVE INSIGHTS FROM

2022 General Election: Ignore the Ground Noise

here was no shortage of political candidates, commercials, or campaign cash for Illinois’ delayed June primary election. As with every political campaign cycle, there was a great deal of ground noise obfuscating and overshadowing the signals worth listening to—and more should be expected until November’s general election. Here’s what I’ve deciphered so far.

Illinois voters will elect a U.S. senator, governor, five executive constitutional officers, 177 members of the Illinois General Assembly (every member) in newly drawn legislative districts, 17 members of the Illinois congressional delegation (down from 18 due to census decline), and two downstate Illinois Supreme Court justices.

As we saw leading up to the June primary, there were two Democratic candidates for governor (including incumbent Gov. J.B. Pritzker) and six Republican candidates. Of the six Republicans, three are financed by wealthy supporters. This influx of campaign cash has allowed for more advertising and television commercials, leading us to the first signal.

One well-financed Republican stated that he wouldn’t reduce the sentence of former Illinois House Speaker Michael Madigan if he’s convicted of pending federal charges. Ground noise! The problem with that statement is that Madigan has been indicted by the U.S. Department of Justice with 22 charges. The governor’s clemency power doesn’t extend to federal convictions.

Another Republican candidate has run commercials stating he’ll eliminate the grocery tax and “Pritzker’s gas tax.” Ground noise! Illinois’ grocery tax raises about $360 million annually for the General Revenue Fund, which funds state government operations.

The state’s gas sales tax typically raises an estimated $800 million annually. When gas was around $4.50 per gallon, the sales tax revenue was projected to climb to approximately $1.2 billion. The gas sales tax has been around since before 2000 and is not to be confused with the motor fuel tax. These sales taxes are enormous sources of revenue that would be difficult to replace—especially when you consider our state’s financial picture is brighter than it has been in recent times, and all three major bond rating agencies have upgraded the state’s bond ratings for the first time in decades.

On the Democratic side, there’s a commercial with a person on the street talking about the “freezing of the gas tax” and linking the gas tax to “profits of oil companies.” Ground noise! The signal to be heard here is that sales tax on a gallon of gas was not frozen. Rather, the scheduled inflation-adjusted increase on the motor fuel tax was delayed until July. As outlined earlier, the proceeds of the sales tax on gas goes to the state’s General Revenue Fund, with a portion going to municipalities. High gas prices equal more tax revenue. The Illinois Constitution requires proceeds from the motor fuel tax to be used to fund transportation infrastructure improvements. These improvements include road and bridge repairs and construction, as well as mass transit projects. By delaying the scheduled motor fuel tax increase, monies for transportation infrastructure will be forborne, and the actuarial cumulative impact will be significant. Further, neither the sales tax on gas nor the motor fuel tax revenues flow to oil companies as inferred in the political commercial.

Commercials also highlight tax forbearance totaling $1.83 billion included in the FY 2023 state operating budget signed into law.

Here are some campaign season highlights to help you decipher the real messages ahead of the November general election.

MARTY GREEN, ESQ., ICPAS VP OF GOVERNMENT RELATIONS

The $45.9 billion state operating budget includes an additional $200 million contribution to the state’s pension fund that’s required and $1 billion for the state’s rainy-day fund.

The signal here is two-fold. First, will the cumulative impact of the $1.83 billion forbearance drive the state off a fiscal cliff? Both the governor and Democratic legislative leaders have said that the state’s fiscal condition is significantly improved due to greater than expected tax receipts, greater returns on investments, and reduced debts that have liberated the state from onerous interest payments. Fitch Ratings, Moody’s, and S&P Global—the big three credit rating agencies—have all opined on the stabilization of the state’s fiscal condition.

Second, I see an absence of focus on the efficacy of state government operations and the restaging and integration of state employees in our post-COVID environment. The COVID-19 pandemic response put state government into crisis mode. The delivery of government services and public protection are the touchstone of state government operations, but we’ve seen challenges in fulfilling services, from driver licenses to CPA licenses, and I think we have further second- and third-order effects to identify.

Another item you may be hearing more about throughout the summer and fall is a proposal to amend the Illinois Constitution with a “Workers’ Rights Amendment.” The Illinois General Assembly approved adding language to the Illinois Constitution guaranteeing the fundamental right to organize and bargain collectively. The appearance of this question on the November ballot is being challenged in Sangamon County Circuit Court. The basis of the litigation is that the proposed amendment that would appear on the ballot is preempted by the National Labor Relations Act and violates the supremacy clause of the U.S. Constitution.

This is just some of the ground noise I identified that could distract voters from hearing a clear message on the issues impacting our state. I can’t emphasize enough the importance of listening for the true signals. We’ve all become acutely sensitive to today’s political environment. Be factual, objective, respectful, and involved. Vote and be civil.

Avoiding the ‘Retired’ Partner Problem

Here’s how to get CPA firm partners destined to hold on until the bitter end to loosen their grip and successfully hand off their firms to the next generation.

BY JEFF STIMPSON

ARP will tell you that more than half of American workers plan to continue working in retirement. Their reasons vary, from the desire for added income to simply staying active. And then there’s the “sense of purpose” work provides. We commit much of our lives to our careers, so it’s no wonder that they’re not only meaningful but also the basis for strong connections to people and purpose that we don’t want to give up. However, there’s a time when the inability to truly walk away becomes problematic—particularly for CPA firms and their partners.

That time is when a partner “retires” and then hangs on at the firm in a sometimes-reduced capacity for as long as possible. When some 60% to 80% of CPA firms are first-generation firms, it’s no surprise this happens with high frequency. It’s also no surprise that many firms never survive beyond the first generation for this same reason.

“In my 20-plus years of consulting to CPA firms, I estimate that 99% of all partners who actually retire from their firms continue working part-time,” says Marc Rosenberg, CPA, founder and managing partner of Rosenberg Associates.

“The problem here is that retired-but-still-active partners can create situations that range from simply uncomfortable to outright risky, and the conditions can quickly become emotionally prickly on a number of fronts,” notes Bill Reeb, CPA, CITP, CGMA, CEO of Succession Institute LLC. “No matter when asked, partners always say they’ll really retire in five years.”

“But it often becomes a rolling five years,” warns Tommye E. Barie, CPA, Reeb’s colleague and executive vice president of leadership development at Succession Institute. A recently retired partner from a top 100 full-service accounting and consulting firm herself, Barie

can empathize—but she also recognizes the risks: “Partners work all their lives to build successful firms. What are they going to do now? There’s often some passive-aggressive behavior that must be addressed, and every weakness a partner allowed to perpetuate is also spotlighted in succession.”

For instance, it’s common to see aging partners not being able to keep up with the demands of partner-level work, there’s less urgency for them to maintain their technical skills, and their often equally aging clients tend to offer diminishing business development opportunities.

So, how can CPA firms find renewed strength and long-term success through succession, all while avoiding the aging partner problem?

THE SLOW ROLE TO RETIREMENT

“Arguably, one of the hardest things to do is to sit down with an aging partner and tell them it’s time to step away,” says Bill Carlino, managing director of Whitman Transition Advisors. “When I consult on a succession plan, I never start with the ‘R’ word—retirement. I ask, ‘How many more tax seasons do you want to work full-time before slowing down?’ This gives the partner a chance to consider a reduced, part-time role as opposed to stepping away completely.”

This transition requires not just a role change but also a mindset change. In Reeb’s view, retiring partners must adopt new attitudes and change certain others—i.e., letting go of ego and perceived indispensability—if they want to see succession success and the long-term sustainability of the firm they built.

Offering examples of what “slowing down” could look like, Reeb and Barie’s approach at the Succession Institute includes the recommendation that partners nearing retirement focus on the following:

• Taking on more technical work in the background.

• Spending time working on their client transition plan.

• Introducing others to their personal networks.

• Using their skills and reputation to sell new business.

• Training others in their area of expertise.

• Acting as an ambassador for the firm.

That last recommendation of acting as an ambassador for the firm is, in Rosenberg’s opinion, one of the best roles for a retiring or retired partner who wants to continue working and being connected in some capacity to the firm. “Utilizing their contacts and referral sources to bring in business is essentially priming the pump for the next generation,” Rosenberg offers.

Of course, this requires that a next generation exists in the first place. So many first-generation firms fail to have a future because the founding partners hold on until the bitter end. “The most important part of succession planning is to develop future leaders. If senior partners never let go, and never train and mentor younger people, there will be no succession,” Rosenberg stresses.

THE RULES OF RETIREMENT

To avoid the aforementioned pitfalls, Carlino says any successful part-time involvement from “retired” partners requires clear guidelines—and an openly accepted mandatory retirement policy that all parties agree to.

The purpose of mandatory retirement policies, as stated by AICPA President and CEO Barry Melancon, CPA, CGMA, “is to allow for the predictable progression of lesser-tenured, and often more diverse, individuals into the partnership, and facilitate the orderly transition of a firm’s clients from senior partners to those who will succeed them,” Rosenberg recounts.

“This ‘predictable progression’ will never happen if the senior partners work forever. This progression will never succeed if the firm’s partners fail to mentor and develop potential partners many years before they retire. This progression will never occur if the potential partners see roadblocks to them actually taking over the firm—particularly in the form of partners who cling to their clients and never leave,” Rosenberg emphasizes.

This is one of those instances where those “emotionally prickly” situations can really crop up. Partners receiving retirement pay have been known to actively keep certain clients for the extra cash. “This situation is most damaging,” Barie says. “It often means that the retired partner is inappropriately being paid retirement benefits for relationships they didn’t transition.”

“Firms under $15 million in revenue especially—where the retiree may be a stronger, longtime personality and presence—tend to be too loosey-goosey about these matters,” Rosenberg points out.

“If you [the firm] allow someone to stay on, they should have oneyear contracts,” Barie suggests. “The firm needs to clearly spell out what the partner can do, the limitations they need to work within (think back to that bulleted list of useful retirement roles), and how the firm will pay for that work.”

“However, there’s no substitute for a formal succession plan, and that should form at least five to seven years before a partner plans to step down,” Carlino says.

To avoid succession problems, retirement needs to be on everyone’s radar as much as possible. “The managing partner should be inquiring and keeping up with when people plan to retire. Regardless of whether the firm has mandatory retirement or not, retirement shouldn’t be a surprise when the time comes,” Barie says.

At the very least, Reeb and Barie think firms and soon-to-retire partners can successfully squeak by if they prepare for two to three years before the changing of the guard.

Starting with the biggest clients first, their Succession Institute literature outlines that a managing partner—working with the retiring partner—creates transition instructions for each client, showing specific steps the retiring partner will perform over a given timeframe, and to whom the retiring partner will be transitioning the client to through those steps. Periodically—i.e., at least quarterly— the managing partner meets with the retiring partner to review the status and note any issues of noncompliance.

“What it all comes down to is that the retiring partner has to build up the partner who’s up-and-coming,” Barie says. “The ultimate goal is for the retiring partner to walk away saying, “‘I’m excited they’re taking over. They’re the one I picked.’”

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

How to Build a Value Creation Mindset

CPAs should use these strategies to build value creation, a vital element of success, into their daily routines.

BY JERRY MAGINNIS, CPA

ou may not think of it this way, but you spend a lot of time evaluating the value of items and services. Whether you shop at traditional brick-and-mortar retail stores or online, you’re selecting items and determining if they’re worth the price on a weekly—if not daily—basis. Some items may be put back on the shelf or deleted from your virtual shopping cart because you’ve determined they won’t provide a value that justifies the cost. Stated another way, you’re unwilling to give more than you believe you’re getting in return.

While we make these kinds of decisions all the time, we often don’t realize that the employer-employee relationship follows a very similar process. When you get hired by a firm or company, its leaders are making an initial judgment about your value. While many factors enter that assessment (including your education and experience and the current talent pool), the employer is essentially evaluating whether the value you’ll create for the organization matches the compensation and other costs it’ll incur by hiring you. Your employer continues to assess your value during periodic performance reviews, leading to a raise, a demotion or pay cut, a furlough, or termination.

It’s critically important to understand this fundamental economic reality because it’s not unique to the accounting profession. If you want to be successful, get up every day thinking about how you’ll create value for your employer. Employees who create value on a sustained basis are rewarded with additional compensation, increased responsibility, promotions, and other opportunities.

Unfortunately, a lot of accounting professionals don’t possess—or at least don’t exhibit—a value creation mindset. Too often, in fact, they have it backwards. They expect their employer to do things for them first, as in, “Give me a raise and I’ll show you what I can do for you,” or, “After I get promoted, I’ll demonstrate how I can perform at a high level.”

A great way to develop a value creation mindset is to think like a business owner. Challenge yourself to evaluate how you would handle a situation or what you might do differently if it were your business and you were going to be directly impacted by the outcome. Chances are, you’d be laser-focused on being as productive as possible every day if you were self-employed. It should be no different when you’re working for someone else. By the way, this is also an excellent principle to follow when making

decisions about business expenses that’ll be reimbursed by your employer, as in, “Would I be choosing this hotel if it were my own money I was spending?”

Here are just a few ways to create value for your employer:

• Deliver exceptional service to your clients.

• Identify opportunities to grow top-line revenue.

• Assess how a rapidly evolving technology landscape will affect the business.

• Mentor, motivate, and inspire your fellow employees.

• Find ways for the business to operate more efficiently.

Regarding the last point, don’t hesitate to raise your hand and offer your employer a suggestion for how to improve operations. It’s a great way to add value and distinguish yourself. Too often, new or relatively inexperienced employees are hesitant to do this. This could be because they lack confidence or, perhaps, they’re not thinking like an owner. They may not appreciate that their fresh set of eyes will often spot opportunities to enhance practices that are due for an overhaul. They may also not fully appreciate that there are certain things they may know more about than others who have more tenure with the organization. Here’s an insider tip: It thrilled me when our younger professionals at KPMG would share ideas or suggestions. Often, they were good ones we’d seek to implement. But even when they weren’t, I’d show gratitude and encourage the ideas to keep coming!

Here are three concrete ways to build a value creation mindset.

CHALLENGE THE STATUS QUO

Too many people accept the ways things are done without thinking critically about whether they can be done better or more efficiently. Get in the habit of challenging and questioning the status quo. This doesn’t mean being hypercritical, but it does mean that you approach each task with an open mind and an awareness of the possibility for improvement. When you do identify an issue or problem that needs to be corrected, try to figure out how to address the matter and fix the situation. Leaders help solve problems as opposed to complaining about them! Act like a leader and you’ll be proactively managing your career in a fashion that helps you achieve success.

PROVIDE FEEDBACK

Two of the biggest assets we possess are our technical skills and fresh eyes. The combination can be extremely powerful if you’re willing to take the time to offer feedback. Look beyond the numbers and the basics of the tasks you’re performing to see the bigger picture. Again, think like an owner. A couple of examples:

• You’re a junior auditor assigned to review a company’s accounts payable process. One of your specific tasks is to develop a flowchart and document the client’s procedures. You’ll also confirm your understanding of existing workflows by interviewing their personnel. As you walk through their processes, ask yourself: Is there anything that can be done better or differently? What controls can be streamlined or enhanced? Can the processes be made more efficient? Is the organization using the data and information generated by these processes in a strategic fashion? There are many opportunities to add value and position yourself as a strategic business advisor if you adopt this mindset.

• You’re assigned to prepare the individual federal and state tax returns of a high-net-worth individual. As you work through the return, you notice several tax planning opportunities that, if properly implemented, will enable them to save money in the

coming year. Do you make the time to schedule a meeting with the client to explain the opportunities? The correct answer is a resounding, yes! That’s added value!

CONTINUALLY DEVELOP YOURSELF

Most organizations have a formal annual evaluation process to provide feedback to employees on their performance and establish professional development goals. Some more progressive organizations do it twice a year. My view is this is way too infrequent to be of value. In a fast-moving business world, you need to be at your best every day. To perform at a high level, you need frequent feedback and development. High-performing organizations are getting better at building more frequent feedback loops into formal HR processes, but most aren’t there yet. There’s a simple solution to this: Regularly ask for feedback! Ask your direct supervisor. Ask your clients. Ask your colleagues. Most will be willing to be candid and can help you course correct and seek professional development opportunities sooner rather than later.

Each day presents opportunities to add (or subtract) value. Be mindful of this reality because, over the long term, your ability to add value will be the key determinant of your success. The more value you add or create, the more successful you’ll be! Whether you work in public accounting, corporate finance, government, or nonprofit, having a value creation mindset will contribute to your success and help to position CPAs as the most trusted and strategic business advisors.

Jerry Maginnis, CPA, is a retired KPMG audit partner and the author of “Advice for a Successful Career in the Accounting Profession: How to Make Your Assets Greatly Exceed Your Liabilities,” a guide for college students and early career professionals.

With expanding employee benefits being a key component of recruiting and retention in a challengingly tight labor market, smaller organizations need an edge to compete against larger counterparts. A professional employer organization might be their answer.

BY NATALIE ROONEY

Here’s your primer. A professional employer organization (PEO) provides comprehensive outsourced human resources (HR) solutions to small and midsize businesses. By leveraging the employee count summed from the many client-companies the PEO contracts with, it’s able to negotiate better rates and features for the various employee benefits it aims to offer—but the benefits can stretch beyond that. For instance, employers often partner with a PEO to:

• Secure higher quality insurance plans at a lower cost.

• Access HR expertise without employing specialists.

• Provide a superior technology platform to employees.

• Manage employee risk and improve safety programs.

• Create a consistent onboarding process.

• Maintain compliance with local, state, and federal regulations.

• Save time to focus on core business operations.

“Co-employment” is how these benefits are unlocked. A PEO creates a unique contract between it and its client-company—a separate business organization, like yours or your client’s—to share the rights and responsibilities of a hired employee. As a coemployer, the PEO puts the client-company’s staff on its payroll, sends W-2s and paychecks with their name and employer identification number on it (along with the client-company’s name), and claims the employees on its taxes. The PEO is essentially the administrative employer, while the client-company remains the worksite employer with the hiring and firing authority. For those who worry that the client-company will lose control of its employees through the PEO agreement, Rob Wilson, president and CEO of Employco USA Inc., says that’s simply not true: “Your employees are employees of the PEO for tax purposes only—the employees always work for you.”

According to the National Association of Professional Employer Organizations (NAPEO), “The average client of a NAPEO member company is a business with 19 worksite employees.” Additionally, more than 15% of all U.S. businesses with 10 to 99 employees are PEO clients.

Robert Lane, a benefits broker with The Horton Group, points out that many employers use PEOs in conjunction with their existing internal HR departments. Using a PEO’s HR person onsite can provide a level of consistency HR departments often lack, especially in high turnover positions. Better yet, the extra support enables existing HR staff to turn the department toward more strategic functions.

Michael Colucci, CEO of Idilus LLC, a provider of payroll, HR, risk management, and benefits administration services, recognizes there are circumstances when co-employment agreements don’t make sense, though—particularly when an employer doesn’t want their employees to be paid under a PEO’s tax ID number—but the company still needs all the management and support services the PEO can offer: “That’s where an ASO comes in.”

Administrative services organizations (ASOs) are another outsourcing option to consider by employers looking to boost their benefit offerings while streamlining their staffing resources. Like PEOs, ASOs provide outsourced HR services, such as payroll and benefits administration, but they don’t require the co-employment arrangement of a PEO. Under the ASO approach, the clientcompany simply outsources specific HR tasks to the ASO while retaining the liability.

“We become like an outside management services organization for the client to be able to expand their resources in providing services

to their employees,” Colucci explains. Regardless of whether you go the PEO or ASO route, benefits abound.

The Perks of Partnering With a PEO

While it may have once been the case, Wilson notes that it’s a common misconception that PEOs only provide healthcare or workers’ compensation benefits: “Today, it’s about all the HR services and strategically using those services to attract and retain employees.”

Colucci admits the basics, like better group benefits, still top the list of perks, but that’s only part of the pros. PEOs may also provide:

• Benefits management. A PEO can manage all the benefits, so employers don’t have to communicate with carriers. “We deal with the carriers to ensure everything runs correctly,” Colucci notes.

• Access to better technology. “The biggest things keeping employers awake at night are recruiting, retaining, and training their employees,” Colucci says. “Software can provide sophisticated applicant tracking—from hiring to onboarding and beyond—but many smaller employers can’t afford this technology on their own. A PEO makes it possible.”

• Compliance assistance. Today’s hybrid work environment means employees are working in different states, which in turn means different sets of regulations for payroll, unemployment insurance, taxes, sexual harassment training, and more. “Many employers aren’t set up for those complexities,” Colucci explains. “PEOs do this as a normal course of business.”

• Training. PEOs also help their client-companies comply with regulations by offering access to sophisticated training technology. Employees are assigned the appropriate courses and their progress is tracked. “All of these services reduce the client-company’s burden,” Colucci says.

Once the client-company’s team is freed from compliance burdens, paperwork, and back-office tasks, it can focus on growth and strategy. Wilson adds: “There’s a lot more juggling today because of different state and federal regulations. That’s where a PEO company is turnkey.”

The Key to Picking a PEO

“PEOs come in all different sizes,” Lane notes, stressing that “it’s imperative to know what services you’re looking for and to evaluate what each PEO offers and how they’ll work with you before deciding if it’s the right fit for your company.” He suggests talking to at least three PEOs during the initial search, while adding these steps to complete your due diligence:

• Check references. A good PEO should provide references for comparable organizations to help evaluate their reputation and experience.

• Analyze pricing transparency. Some PEOs may bundle pricing into a lump sum and charge a percentage of gross payroll without showing how much you’re paying for workers’ compensation insurance, healthcare benefits or, most importantly, administrative fees. The PEO should show you exactly what it’s charging. As another part of pricing transparency, confirm if health insurance will be self-funded or fully insured. “Self-funded PEOs have been limited in many states and regulated because of inconsistencies in pricing and transparency,” Lane cautions. “Perform your due diligence and insist on transparent pricing.”

• Look beyond HR. PEOs continue to evolve, adapt, and add services beyond employee benefits. “It’s really more about strategy,” Lane says. “Hire a PEO to enhance the areas you don’t do as well.”

• Verify certification. PEOs can become and remain certified under the IRS’ Certified Professional Employer Organization (CPEO) Program. CPEOs must meet various tax status, background, experience, business location, financial reporting, and bonding requirements, among others. While many smaller, reputable PEOs might not be certified, it’s a factor for consideration.

• Understand the level of service. Is there a dedicated person to contact or just an 800 number? “If personalization is important, this is a key point to consider,” Wilson advises. “Understand how technology will be used and the level of customer service your employees will receive.”

Priming the PEO Relationship

According to Lane, the decision to partner with a particular PEO should be driven by the employee experience. “Companies spend enormous amounts of time, money, and resources on attracting and retaining the best talent, so you need to ensure your human capital management systems reflect that,” he says.

“Remember, you’re bringing in a PEO to enhance your HR opportunities and employee benefit options,” Wilson adds. A big part of that enhancement is getting the implementation right. “Make sure the PEO understands what’s important to you as a business, what your expectations are, and what the timeline is for meeting those expectations,” he says. “It’s also important to meet the team you’ll be working with and to ask if you’ll have the same team each week.”

Colucci emphasizes the importance of communication. “When an organization partners with a PEO, you don’t just flip a switch and start working together the next day,” he cautions. “There’s an implementation and transition process. It’s essential for the PEO to communicate with the client-company, and more importantly, the client-company must be able to get in touch with the PEO’s implementation team to make sure things are done correctly. Mistakes will happen, and you want to be able to fix them quickly.”

Once you’re up and running, don’t let your PEO relationship get stuck on autopilot, either. “Ask about the next four months, six months, or year,” Wilson suggests. “No one has a crystal ball for rates, but given the current environment, look at the PEO’s history of rate changes. When you’re coming to a PEO for their buying power, you don’t want to be hit with a 15% rate increase shortly after forming the relationship.”

The PEO Opportunity for CPAs

After 10 years as the CFO of a PEO, Randy Butler, CPA, became a director at Somerset CPAs, a firm that specializes in working with PEO clients. Butler says CPAs are uniquely positioned to help their small and midsize business clients identify if there’s a strategic opportunity in utilizing a PEO. “CPAs are a business’s trusted advisors,” he says. “We’re usually the first call a CEO makes when there’s an issue.”

In Butler’s view, CPAs should be proactively determining if a PEO is right for their clients’ businesses by evaluating if, and how, a PEO will offer better benefits for employee retention, reduce payroll costs, address compliance issues, or offer other strategic advantages. “A CPA can easily evaluate the costs and needs for their clients,” he says.

At the same time, CPAs may find their own firms could benefit from a PEO partnership. Butler says bringing in a PEO can help CPA firm leaders focus on their growth strategies instead of getting bogged down in the day-to-day activities of firm administration. “After all, a PEO is already set up to do all that,” he notes, pointing out that turning to a PEO for its insight is just like a client turning to a CPA for their unique expertise.

“Every day, clients entrust their financial management decisions to us as CPAs because they know we’re the experts,” he says. “A PEO offers CPAs access to specialized expertise in administration, benefits, and HR. Why not look to the people who are experts in what they do? Let’s use those people to help manage and grow our own businesses, too.”

Natalie Rooney is a freelance writer based in Eagle, Colo. A former VP of communications for the Ohio Society of CPAs, she’s been writing for state CPA societies for over 20 years.

Getting Onboarding Right at Your Firm

BY CAROLYN TANG KMET

From the smallest to the largest accounting firms, recruiting and retaining talent seems to bring about rough seas. The most recent 2021 PCPS CPA Firm Top Issues Survey, published biennially by the AICPA, confirmed once again that “finding qualified staff” was a significant concern for all firms with two or more professionals, and retaining and developing talent consistently ranked as one of the top five issues among the largest firms.

It’s no surprise then that firms crewed with human resources experts advocate for structured onboarding processes to both familiarize young professionals and new hires with a firm’s internal operations and to engage and immerse them in the organization’s culture. But what of the firms that don’t yet have such onboarding steps charted out? While welcoming new hires with some company swag, maybe a team lunch, or a social media post are common goto moves of today’s busy business leaders, a bit more empathy and effort on their part can go a long way in ensuring the fresh faces joining their firms keep their heads above water.

“While many, if not most, public accounting new hires have had an internship, they’re still going to be somewhat unsure of whether their education has truly prepared them for the profession,” says Kimi Ellen, CPA, managing partner at Benford Brown & Associates and a director on the Illinois CPA Society’s board.

For new recruits with minimal workplace experience, it can be intimidating to simultaneously adapt to a new environment, a new role, and new coworkers. This triple threat can fuel apprehension to even dip a toe into the water, let alone fully immerse oneself into the happenings of the firm.

With this in mind, Ellen encourages firm leaders to understand that they’re going to need to toss their new recruits a lifeline and help them navigate the waves of uncertainty associated with joining a new workplace: “They’re going to feel intimidated to work with peers in which, outside of work, they have little in common with. Until they develop relationships, they’re going to feel isolated.”

To help ride out these initial impediments, Ellen personally checks in regularly with her new hires to assess how they’re acclimating. “I like to ask my new hires at least once or twice a week if there’s something that I can do to help them feel more comfortable in their work environment. I ask if there’s something the firm can do to help them understand our performance expectations,” she notes.

In similar fashion, David Bitton, co-founder and CMO of DoorLoop, a property management platform, stresses the importance of getting new hires started off on the right foot: “Don’t leave them hanging or unaware of what to do, especially on their first day!”

His steps for initial onboarding success include ensuring all new hires are promptly introduced to everyone with whom they’ll be working closely with and that these individuals are available for clarifications and questions. Bitton also suggests managers map out clear plans for new hires that provide essential directions and outlines the expectations of them and their tasks. “Be specific, so that your new hire won’t have to tiptoe around,” he emphasizes.

Of course, the explosion of remote and hybrid work environments has added new complexity to the onboarding process. James Shalhoub launched Finn, an e-commerce company, in early 2020 that coincidentally coincided with COVID-19’s initial surge here in the United States, requiring a new approach to onboarding—video.

As part of his video onboarding process, employees are provided with a training schedule that clearly outlines each day’s itinerary, mapping out exactly what new hires will learn and focus on during each training. “Our main objective was to make hiring more efficient, while also ensuring we were giving our new hires all the tools they needed to succeed,” Shalhoub recalls. “Using this approach, our onboarding process has improved to two weeks from three. We still tweak little things, but we’ve noticed a huge improvement in our new hires’ initial performance and the questions they ask.”

While clarity throughout the onboarding process is decidedly crucial, firms also need to be cognizant of the possibility of overdoing it—information overload is a fast-track to overwhelming your new hires.

AVOIDING THAT SINKING FEELING

“Some firms simply go overboard with onboarding,” says Daniel Cook, director of human resources for the Texas-based law firm of Mullen and Mullen. In fact, he argues that there are some benefits to letting new hires swim a little.

“I believe that giving young professionals some autonomy in their projects encourages them to learn new skills, while also learning from their mistakes and failures. It also teaches them how to be effective leaders, and helps them build self-confidence,” Cook advises.

If you haven’t picked up on it yet, the need to address and quickly start building new recruits’ self-confidence is a requisite of any effective onboarding strategy.

One way to do this is to implement “shadow days,” where new hires are partnered with seasoned peers, subject matter experts, and even the most experienced employees for a day at a time to help them acclimate to the culture and workflow of the organization. “Being able to watch work be performed is the number one way to ensure that someone will be more comfortable performing the task appropriately,” says Joanna Zambas, a career expert at CareerAddict.com, an online career development resource.

Taking this a step further, establishing a formal mentorship program could help ensure smooth sailing throughout the course of the onboarding process. Bitton says that providing dedicated mentors is a proven key to both employee success and creating a stronger sense of belonging, as mentors can guide new hires through the initial uncertainty, providing direction and reassurance, and then serve as go-to resources and advocates as the mentees navigate through their careers with the firm.

“A mentor knows the ins and outs of the job and the firm,” Bitton explains. “The guidance, feedback, and introductions they can provide will undoubtedly help new hires to become productive members of the firm more rapidly.”

Of course, there’s more to mentorship than simply assigning a new hire to an established firm member. “A good mentorship program will have several components in place, including a clear and concise description, a timeline of expectations, a system for tracking progress, and a way to give feedback,” adds Erik Hansen, a management consultant with the London-based IT recruiting firm Right People Group.

That last bit about giving feedback is critical, according to Zambas. “The most important component is the follow-up,” she emphasizes. “This will tell you whether or not the new hire has benefited from the mentorship program and can help determine any adjustments that might be needed moving forward.”

This includes adjustments the mentors may need to make. “We call it ‘T3,’ or ‘train the trainer,’” says Luke Lee, CEO of Pala Leather. “Firms should consider all of their managers, leaders, subject matter experts, and seasoned employees as trainers, and should put formalized processes in place to educate them on proper knowledge transfer and instruction processes to ensure consistency and uniformity.”

To further help facilitate mentorship relationships, firms can sponsor mentor/mentee workshops and retreats where team-building exercises are incorporated. Firms could also explore structured group projects, where working teams are required to be a mix of junior and senior employees. Such efforts facilitate communication, collaboration, and cross-functional networks, while providing everyone a sense of purpose.

MAKING THEIR OWN WAVES

As important as all the structured, formal processes and programs are, sometimes the informal opportunities lead to even more meaningful connections and development. “If you really care about the success of your employees, it’s important to not only provide them with opportunities to grow but to also support what works for them,” Zambas says. In this sense, firms should be clear about their willingness to invest in sending their young professionals to relevant conferences and industry events of interest to them, and to support their desired memberships and participation in industry associations, to encourage both learning and networking.

These experiences are also known to lead to the development of informal mentorships. Understanding that formal and informal mentorships can offer significantly different experiences and development opportunities, Hansen say firms should “encourage their employees to reach out to their networks and seek advice from experts throughout the profession.”

Firms can further facilitate informal mentorships internally by creating physical and virtual spaces where employees can socialize freely. “In these spaces, employees can be transparent and have ‘watercooler’ talk,” Shalhoub says. For instance, his organization has a dedicated Slack channel where employees can chat virtually. “It’s something we implemented for fun, but it really gets people talking and sharing life experiences—all good things for creating that sense of belonging and purpose,” he says.

“When your new hires and young professionals understand they’re valued as people, when they see the firm is investing in them, they feel supported and appreciated. The result is growth, effectiveness, motivation, performance, collaboration, and loyalty,” says Lisa Nichols, CEO of Love Your Niche.

However, even with defined onboarding processes, formal and informal mentorships, group projects, networking spaces, and more, there’s only so much an organization can do to onboard their new hires and keep their heads above water in a demanding profession—eventually they need to learn to tread water and then swim on their own.

Nichols points out that “there are many aspects of professional development where skills and knowledge are ‘caught’ rather than ‘taught.’ As such, firm leaders need to remember that their new hires are more than just employees, they’re people, and we’re all just doing our best to stay afloat.”

Keys to Career Success

“Invest in your 401(k) as early as possible and find a mentor within the organization and outside of the organization.”

Kimi Ellen, CPA Managing Partner, Benford Brown & Associates

“Be patient and understand that it takes time to learn the ropes. Don’t be afraid to ask questions. Take the time to learn the company culture, seek out mentors, and build relationships.”

Erik Hansen Management Consultant, Right People Group

“When we’re young, all we think about is getting up the corporate ladder as quickly as possible. This leads to the creation of improbable goals and sets us up for burnout. It’s great to have dreams, but the most important thing to get ahead in life is to do your function thoroughly, continually learn and be conscientious.”

Luke Lee CEO, Pala Leather

“You don’t have to know everything before you start to contribute, so don’t be embarrassed that there are things you don’t know. Ask lots of questions. People love to share their insight and advice!”

Lisa Nichols CEO, Love Your Niche

Carolyn Tang Kmet is a senior lecturer at the Quinlan School of Business at Loyola University Chicago and a frequent contributor to Insight.

The Back-to-the-Office EXPERIENCE

What is and isn’t working as people trickle back into the office in a post-pandemic world? Three CPA firm partners weigh in on why listening to staff is more important than ever as we try to get back to business as usual.

BY CLARE FITZGERALD

ISit the donuts or free lunches? Is it our renewed desire for connection or fear of missing out? Or is it the lingering hope for a return to normalcy? Whatever it is that’s doing the trick, many organizations are managing to slowly coax more staff back to their offices—for at least part of the workweek. But the environment and experience workers are returning to is unlikely to truly mimic what they abruptly left when COVID-19 shutdowns went into effect more than two years ago—and that’s OK.

Astute business leaders will tell you that the COVID-19 pandemic simply accelerated workplace and workforce shifts already in motion. While that mindset doesn’t make these changes any easier to navigate, it does change the direction we head. After all, we can’t keep looking to go back to business as usual; we must chart out what it means to do business moving forward—including if that means being in the office full-time, part-time, or not at all—and how that affects productivity, morale, and culture.

Accounting firms in particular still seem to foresee a future with fulltime, in-person work. In an April 2021 survey conducted by media company Arizent (owner of Accounting Today), 53% of accounting leaders expected that more than half of their staff would be back in the office full-time within a year, compared to 42.7% of all respondents, which was comprised of leaders in accounting, banking, financial planning, financial services, fintech, and other related industries.

In areas such as remote work policies, in-person meetings, use of offices, engaging with clients, physical office footprints, business travel policies, and employee onboarding, accounting leaders were significantly less likely to expect to permanently alter their policies because of the pandemic. That said, 60% of accounting leaders expected their firms to allow significant work-from-home opportunities after the pandemic.

A year on from that survey and accounting leaders still aren’t ready to replace one work structure with another, but they are acknowledging that remote work on a larger scale is likely here to stay. Now, they’re watching and listening to find the rhythms that’ll make long-term hybrid schedules and evolving work arrangements feasible for individual and organizational success.

Here are four key lessons organizations are learning.

1. Mandates Aren’t the Answer

BKD CPA & Advisors (now FORVIS LLP) started encouraging its people to come into the office last summer and, by September 2021, had formalized a hybrid work policy with staff spending three days in the office and two days at home, according to Tom Murtagh, CPA, JD, MBA, a tax partner in the firm’s Chicago office and the immediate past chairperson of the Illinois CPA Society Board of Directors. When the COVID-19 Delta and Omicron variants further delayed the implementation of that hybrid plan, Murtagh says the firm simply kept the doors open and took a wait-and-see approach.

During this most recent busy season, the firm saw a resurgence of people coming back to the office. “Our associates and senior associates wanted to be in the office,” Murtagh says. “Busy season perks, like lunches and dinners, helped draw people in, but the uptick occurred organically from the bottom up—not because of any mandates. A lot of people valued the office time and found they liked the boundaries of leaving work at work and going home mentally clear. Some of our people have been coming in five and even six days a week.”

Taking a different approach, the leaders of Schaumburg, Ill.-based accounting and business advisory services firm KRD Ltd. decided in spring of 2021 that their people wouldn’t be required to ever come back to the office—that’s right, ever. According to

Lauren Clawson, CPA, a partner at the firm, staff didn’t believe the announcement at first.

“They weren’t sure they could trust that they were being told they could align their schedules with their home environments long term. But we listened to what we heard our people saying. We thought that the best way to retain people was to help them be happy,” Clawson explains. “Making the decision to offer a fully remote option has given people confidence to make their own decisions. Some people come in every day, some work completely remotely, and some come in a few times a week.”

In both cases, firm leaders acknowledged that their employees, across experience levels and roles, proved they could perform their work effectively from home—thus eliminating the stigma of working remotely and the need for mandates or one-size-fits-all approaches.

“There has definitely been a mindset shift that if people are being responsive and communicating, the trust is there. Rather than setting heavy mandates that people will naturally resist, it’s more important to meet people where they’re at and show you’re caring for them as individuals,” Murtagh says. “The challenge now becomes how to build a community.”

2. In-person Experiences Can’t Be Replicated

Despite the proven ability to complete most work from home, building community and culture is believed to remain rooted in personal interactions. “Ultimately, we’re a people and relationshipbased business,” Murtagh says. “It’s just harder to do team building, relationship building, and mentoring remotely.”

Brian Daniell, CPA, managing partner at West & Company LLC, a multi-office public accounting firm serving clients throughout Illinois, agrees. His firm stayed open throughout the pandemic and is continuing its in-office expectations, which he says is more suitable for professional development—especially for younger staff. “We believe our less experienced staff should be in the office for mentoring and for learning the profession,” he says, noting that some of their recruits have come to the firm specifically for the inperson, one-on-one training they provide.

Beyond mentoring and training opportunities, Murtagh says his firm saw a positive energy shift that came with staff returning to the office: “We noticed that our people wanted the break to come in and see friends. There was an organic desire to be with people.”

Murtagh acknowledges that the nature of the work his team does is very “heads down and focused,” but the in-person experience often provides deeper connection and support. “By being

physically present, people are influencing each other. When you’re in the same physical space, you pick up on things on an emotional level. If you’re feeling down, someone else’s energy might bring you up,” he emphasizes. “Even the introverts have found they benefit from that shared experience of being in the office.”

Murtagh adds that he has noticed favorable effects on motivation and productivity: “Looking around and seeing everyone else working might give you the energy to stay one more hour to finish a project. It can help pull you across the finish line. I think being together creates a positive impact on motivation and how you approach your work.”

Murtagh says his firm is working to leverage the benefits of being together in person while also continuing to use the video calls, screen-sharing applications, and online chats that kept dispersed teams connected throughout the pandemic. Most meetings are still held via computers—even for those in the office, which Murtagh says makes it easier for remote staff to see faces and pick up on non-verbal cues. “People have gotten so used to presenting and communicating with these tools,” he says.

3. The Definition of “Flexibility” Is Evolving

Melding the remote and in-person worlds will continue to be important as it becomes clear that organizations will need to develop new and varied work arrangements to recruit and retain talent moving forward.

“Remote work is part of our society that’s here to stay,” Daniell says while pointing to the uptick in applicants for positions at his firm who are currently working in a remote environment and prefer to continue doing so.

Clawson says, KRD has always provided flexibility for parents to attend kids’ activities and for other circumstances, but she feels there’s wider acceptance across the profession coming: “Our industry has gotten used to the flexibility concept.”

Inspired by a podcast conversation between author and research professor Brené Brown and organizational psychologist Scott Sonenshein, Murtagh has started thinking about hybrid work beyond preset daily schedules—and is challenging his team to do so too. “Instead of coming in on the same two or three days every week, maybe we need to be thinking about what our work looks like and schedule our weeks based on the work that we’re doing, what we need from our peers, when our clients can meet, and when we need focused time,” he explains. “You might realize that Monday is the best day to catch other people in the office, and Tuesday really needs to

be a head down day. It’s about learning how to get the best out of yourself rather than following a prescriptive form.”

In other words, the definition of flexibility is likely to evolve as firms explore what flexibility means to their employees in a post-pandemic world. Murtagh says firm leaders can’t afford to make assumptions about the types of flexible work arrangements that appeal to staff. “Surveys and listening sessions provide great feedback, but realize that flexibility can be very unique to a person based on life circumstances, personal risk factors, family or caregiving responsibilities, and other experiences,” he stresses, noting that flexibility preferences can vary greatly even from one class of interns and new graduates to another: “Nothing is cookie-cutter. What one group is looking for could be totally different in the next group.”

Recognizing that people now have expanded preferences for how they want to work, firms are expecting to recruit for more projectbased and contract roles. Offering opportunities for a fixed amount of time or for the duration of a project is one way to appeal to people seeking flexibility regarding timelines and role responsibilities.

Clawson also predicts that more hybrid models are on the horizon, including options for more varied schedules to meet the demands of people who would prefer to work fewer hours for less pay.

Getting creative with benefits is also important to meeting expectations for flexibility, according to Daniell, who notes that West & Company provides four-day weekends for major holidays. “Work-life balance will continue to be critical going forward,” he says. “In a very tough market for hiring, you have to show you’re worker-friendly.”

4. Adaptability Is Central to Success

Though the pandemic created disruption and upheaval, it also has forced organizations to think deeply about how to evolve and motivate employees as conditions change. With varied and emerging work models, staying nimble will be key to coordinating schedules, evaluating space needs, and leveraging the benefits of remote and in-person work.

“Pushing back and trying to get things back to the way they were won’t help your cause,” Clawson says. “The model has to change. We’ve already adapted a lot, and we’re excited for the changes ahead. We’re developing a firm where 22-year-olds will want to stay. We want to be successful, and we want to be here for generations to come.”

Clawson notes that KRD prioritized checking in on people during the pandemic, and the firm continues to develop new programs based on employee feedback and challenges that arise. For example, leaders have put more structure in place for meeting with people remotely and checking on projects; remote and in-person onboarding programs that expose new hires to a larger number of colleagues have been instituted; a buddy program was implemented during tax season; and the focus within some training programs has shifted. “We’re teaching more skills now for how to succeed in public accounting, such as getting through busy season, navigating client issues and personalities, building relationships, and communicating with managers and partners,” Clawson explains.

Given all that has changed since COVID-19’s emergence, Daniell doesn’t see further drastic changes on the horizon. Instead, moving forward, he simply notes that firms have to be willing to listen to their people and make accommodations: “We have to adapt to grow and succeed in this new world.”

Clare Fitzgerald is a Chicago-based freelance writer with experience working in CPA firms and covering trends in the industry.

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

5 Tips for Leading a Hybrid Workforce

Performance, productivity, and … proximity bias? Leaders navigating hybrid work environments have new risks to watch for when trying to level up their leadership skills.

We’re two-plus years into the ever-changing COVID era, and employers and employees alike are wondering what the future of work will look like. “Employees are happier and more productive when they work from home two or three days a week, so very few employers are forcing them back to the office full time,” Nicholas Bloom, a professor at Stanford University, told Forbes in May. Sure, it’s hard to argue that, but what comes next?

For now, hybrid work is forming a solid foothold. A recent Conference Board survey of HR executives found that 90% of organizations now allow hybrid work arrangements. Likewise, Gallup research indicates that 53% of employees anticipate it will be their typical work arrangement in the future. Another 24% of employees expect to work fully remote, while the remaining 23% plan to return to being on site full time. Gallup also found that nearly 60% of employees whose duties are conducive to remote work prefer a hybrid environment. But what does a hybrid environment even look like?

For some organizations, hybrid means that staff split their time between working remotely and being in the office on dedicated days each week. For others, hybrid means staff will work remotely on any given day. In many cases, hybrid means some combination of those two dynamics, or maybe even a limitation on them as leaders push to get back to business as usual.

The challenge for leaders now is not just implementing a framework that resonates with employees seeing various hybrid work environments continuing to gain traction elsewhere, but also learning to lead those employees in these hybrid environments. Needless to say, it’s anything but business as usual.

Here are five tips to help you level up your leadership now.

1. BEWARE OF PROXIMITY BIAS

This phenomenon can be best described by an old English proverb: “Out of sight, out of mind.” It’s human nature to pay more attention to what’s in your line of sight or what’s within earshot. If you’re not careful, you could unwittingly favor your in-person staff members with communication, assignments, networking activities, and other opportunities that aren’t readily available to your remote workers.

Comments like, “I wish you were going to be in the office that day,” and, “I realize you work from home,” are indications that proximity bias could be creeping in. “They were in the office, so I assigned them to this new project,” is a clear indication that preferential treatment is tipping one way.

As a leader, you must guard against these signs of potential bias, because even just the perception of favoritism can be detrimental to both you and your team. I’ve seen proximity bias even damage peer relationships. To increase your awareness of any risks, and naturally keep the lines of communication open, I recommend regularly inviting your team members to provide feedback on how they’re doing. This is the least you can do in a hybrid environment.

2. PROVIDE COLLABORATION EQUITY

If proximity bias is a potential poison, collaboration equity is a potential antidote. Prasad Setty, vice president of Digital Work Experience at Google Workspace, says collaboration equity is achieved “when all workers have the ability to contribute and communicate equally, regardless of location, role, experience level, language, and device preference.”

When you break down that definition, three clear aspects for creating collaboration equity emerge:

1. Representation equity requires that everyone on your team can be seen, heard, and portrayed equally, regardless of their work location.

2. Participation equity requires that your employees have access to the same tools and can fully participate in meetings and discussions—this puts you as the leader in the role of a facilitator.

3. Information equity requires that all team members have equal access to the same information.

3. BE HYBRID-AWARE WHEN COMMUNICATING

Frequent and effective communication is even more crucial in a hybrid work environment due to the numerous, subtle advantages that are lost when teams aren’t working together in person. These advantages stem from the many informal, unstructured bites of communication that occur organically—think conversations over the cubicle wall, dropping by a coworker’s desk, talking at the coffee pot, or a spontaneous invitation to grab lunch.

To be an effective leader, you need to ensure that your entire team is accounted for when vital information is shared, whether that’s during meetings or informal conversations. In many cases, this may mean using a combination of Zoom, Microsoft Teams, chats, emails, or phone calls to meet all your people where they’re at. The goal is to be flexible and engage your remote employees as if they were in person.

If you’re at risk of overlooking your remote employees (i.e., the proximity bias danger mentioned above), appoint one of your more detail-oriented team members to serve as a communication coordinator, watching for potential gaps, particularly when communicating updates on important decisions or when progress reports are shared. I encourage the use of questions to aid in team communications. You may consider asking at the start of a mixed in-person/Zoom meeting, “Is there anyone missing from this conversation who needs to know this information?” Or if something comes of one of those informal in-person communications, ask, “How can we inform the team members who aren’t present about this?” Again, this is about ensuring equity by using whatever tools your organization has at its disposal to communicate with everyone on your hybrid team.

4. COACH FOR PERFORMANCE AND PRODUCTIVITY

Leading in a hybrid work environment requires you to focus even more on what needs to get done, and how to get it done productively, given the increasingly different work styles that develop in these situations. I think it’s important to help your team members learn to maximize the advantages of each work setting. Remote work is often best for tasks and projects that require focus and undistracted attention, while working together in person is better for the tasks that benefit from connection and collaboration.

While that seems straightforward, many workers give little thought to their priorities before starting work each day. In one amusing news article I recently read, workers bemoaned that they had gone

into the office one day only to discover the people they hoped to connect with weren’t there that day. That’s probably happened to most of us more than once at this point. Coach your team to avoid this trap by urging them to plan their days based on where they’ll be working. Instead of unnecessarily losing time to a commute, encourage your team to coordinate schedules when there’s a need for collaboration with one another and with members of other teams. Plus, this extra communication can serve to help everyone be more hybrid-aware, ensure equity, and reduce the risks of proximity bias.

5. WORK ON YOUR TEAM, NOT JUST AS A TEAM

The truth is that our working environments are going to continue to evolve, and the sheer number of variables and moving parts associated with that evolution make it essential that you continually work on building healthy relationships within your team. Step back occasionally and intentionally focus on the team itself: Are there situations where everyone will be together in person that you can plan special team events around? Getting away from work to play, learn, or serve together is more important now than maybe ever for building affinity among team members.

One team I know followed up a recent all-staff training event by going axe throwing together. Another team invited me to facilitate a team-building day centered around a behavioral assessment that generates insights on leadership styles, communication preferences, and other workplace dynamics. As a leader navigating a hybrid work environment, watch closely for healthy (and unhealthy) behaviors as they emerge during the activities you plan for your people. And don’t neglect one of the most critical parts of the experience—debriefing the lessons learned. Ask, “What did you learn about yourself? What did you learn about your teammates? What did you observe about our team? How can we work together better in the future?”

We don’t know what working together in the future will look like, but as a leader currently navigating a hybrid work environment, it’s up to you to bring your team together in creative and meaningful ways. Follow the five steps above and you’ll not only level up your leadership skills but also the skills and relationships of your team.

Kristie P. Paskvan, CPA, MBA Board Director, First Women’s Bank and SmithBucklin Leadership Fellow, National Association of Corporate Directors kppaskvan10@gmail.com

ICPAS member since 1984

Making the Jump From Hybrid-Ready to Hybrid-Enhanced

Corporate boards have a responsibility to ensure company leaders are prepared to effectively lead in hybrid work environments.

Talent. It’s always been a boardroom topic, as succession planning, risk, and culture are all key components of a board’s work. Among the boards I’m involved with, the conversations around talent have only intensified as COVID-19 continues to challenge our ideas of the ideal workspace, the adoption of hybrid and remote work environments, and the ways that we manage and lead our teams moving forward.

If we look back at May 2020, approximately 61% of workers surveyed for the Working From Home Research Project were then, indeed, working from home. According to Nick Bloom, a Stanford professor and cofounder of the project, currently just 25% to 35% of workers are still working from home full-time, with the rest of the population starting back into the office either full-time or on a hybrid, rotational basis. As CDC and local COVID-19 guidelines have become more relaxed, companies have increasingly requested their employees to start returning to the office. But what can employees expect to return to?

I suspect most office spaces have been updated for more collaboration, enhanced with new technology, and may include hoteling space for the first time. There has been a renewed push by most companies to purposefully create environments that encourage interactions. Although, I still hear of managers staying behind closed doors to Zoom or Teams with staff if they have a question—not a successful in-person model, even before COVID-19.

As I attend board meetings and discuss what’s working and what’s not in seeking a new normal, I’ve been struck by the apparent need to build a new playbook specifically for preparing and equipping managers to lead better in increasingly hybrid work environments. The managers at your company are key in this playbook. They’re the influencers. They’re the gateway for developing future talent. So, assisting your managers in understanding and solving hybrid work challenges isn’t just key to their advancement but also to your organization’s growth and success.

Coming back into the office certainly offers opportunities to foster collaboration, celebration, connection, and coaching as people gather in person, but it’s just as important to be more intentional about managing and developing remote and hybrid staff. We can’t discount the impact that two-plus years of avoiding the office has had on all our leadership skills.

Enter the manager summit, a development concept that I think is going to be key to navigating the varying hybrid work environments companies are implementing. To simplify

the roadmap to equipping your managers to lead a growing mix of remote, hybrid, and in-person teams effectively, we can split the concept into three phases to explore during manager summits: Awareness and Information, Individual and Team Application, and Advocate and Champion.

AWARENESS AND INFORMATION

Microsoft’s recent report, “Great Expectations: Making Hybrid Work Work,” emphasizes that employees now have an evolved view of work and its place among their priorities. And while they’re generally willing to come back to the office, they want to know how it’ll be different and whether it’s “worth it,” as health, family, time, purpose, and well-being are increasingly being prioritized over work—especially by Gen Z and millennials (i.e., future managers and business leaders).

A Gartner briefing on leading and managing a hybrid workforce stresses that our new hybrid work environments require more flexibility, shared purpose, and deeper connections. Equipping your managers with skills of empathy, adaptability, effective communication, and relationship building—while embracing new and sometimes multiple technologies—will help create “hybridready” managers.

One company that I follow has established successful manager summits for this exact leadership development purpose. They’ve invested in an outside expert with both the data and collective experience to share knowledge about hybrid work and employee motivation. In making similar investments, companies can establish their responsiveness to feedback and reinforce the important roles that their managers play. Consider this finding from the 2021 Gartner Hybrid Work Employee Survey: “When employees have high empathy-based management, they are 2.77x more likely to have high levels of organizational trust, resulting in higher levels of engagement and productivity.”

At an effective manager summit, one of the goals is to establish a forum for discussion and idea sharing, particularly about what struggles exist within the manager ranks. The collective input of the management team will create employee ownership of the action plans that result from these sessions. At the same time, managers learn what other leaders and companies are also challenged by, and what data tells us is working to create team cohesiveness in this new hybrid state.

INDIVIDUAL AND TEAM APPLICATION

While an initial manager summit could encourage common issue gathering, future sessions can further action plans surrounding hybrid work practices. For example, managers can work together to identify ways to ensure that any employee’s contribution is recognized regardless of whether they’re present in the office. Managers should also be prepared to resolve misunderstandings due to conflicting schedules and expectations. Receiving and giving effective feedback will become even more important skills for managers, as empathy, flexibility, and communication must become forefront in their daily roles.

For all new hires, employee onboarding will require all the collective efforts of the organization to teach and promote company culture across multiple working environments and locations. Companies are revising onboarding procedures to ensure remote and hybrid employees receive not just the same training opportunities but also the same opportunities to establish personal

relationships, whether that be through scheduled coffee chats, virtual social events, or retreats that bring everyone together.

ADVOCATE AND CHAMPION

Supporting managers is going to be critical to the success of your hybrid work environment; that means supporting their ideas and allowing ownership of the action plans they establish to enhance development and create psychological safety throughout the organization.

According to Microsoft’s 2022 Work Trend Index, 28% of companies have established team agreements to create team norms around hybrid work. Investments in space and technology are necessary to support managers and their teams, yet 74% of managers indicate that they “don’t have the influence or resources they need to make changes on behalf of their team.”

This is a clear indication that company leadership needs to step up and provide managers with the mental, intellectual, social, and technological skills, support, and resources needed for them to successfully make the jump from being hybrid-ready (having action plans and ideas for managing hybrid teams) to being hybridenhanced (armed with everything needed to implement an effective hybrid work environment that leverages the team’s talents).

Board directors are perfectly positioned to support and encourage the shifts needed to ensure management is ready to lead people and companies into the future. If you’re on a corporate board, it’s time to shift the talent talk toward what’s needed to be a hybrid-enhanced organization instead of just a hybrid-ready organization—a distinction that I think is going to become critical to talent recruitment and retention and long-term company growth.

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

The Self-Employed Need Retirement Plans: CPAs Can Help

They come to us for business advice, so why not retirement advice? As the number of entrepreneurs grows, CPA firms can grow with them by providing needed personal financial planning advice.

There are about 16 million workers in the United States who consider themselves to be self-employed now, up from around 13 million in mid-2020, according to the Pew Research Center. While the COVID-19 pandemic primed this growth, both in a positive sense (perhaps the “Great Resignation” lit a fire under the feet of would-be entrepreneurs) and in a negative sense (as businesses let go of thousands of W-2 employees), I believe we’ve entered a period of permanently high entrepreneurship moving forward, even as the economy recovers from its pandemic ills. But what of the retirements of these go-getters? How many employer-sponsored retirement accounts have they left behind, and how much of their personal savings has gone into starting their new ventures?

I’ve often felt that we CPAs and CPA personal financial planners can make the most impact in the lives of the self-employed and small business owners—and now we have a bigger market than ever to serve. So, how can we as strategic advisors ensure these entrepreneurs meet their long-term financial goals?

Assuming that your self-employed clients are already well on their way to covering the basics—think the proper legal and tax structures for their businesses, sound budgeting and cash flow management, and risk management (like business/liability and long-term disability insurance)—you should reinforce the benefits of retirement planning. There are five primary retirement programs available to the self-employed: IRAs, SEP-IRAs, SIMPLE IRAs, solo 401(k) plans, and defined benefit pension plans. Each of these vehicles has different mechanics, pros, and cons to consider. Here are some basics to take into consideration when discussing them with your clients.

FLEXIBILITY NEEDS

The planning and selection of one or more retirement programs for a self-employed individual should be done in such a way that they establish meaningful holdings in three types of accounts: pre-tax, after-tax, and tax-free. The goal here is to create financial flexibility for when the time comes to utilize these assets, whether that be for living expenses or another venture.

The simple fact is that our tax and financial planning opportunities are greatest when clients have these three pools of assets to access. For example, you might recommend a withdrawal of pre-tax funds in excess of your client’s required minimum distribution (RMD)

if the excess amount “fills up” their current marginal tax bracket, therefore reducing the likelihood that those funds will be taxed at a higher rate in the future.

Of course, the further goal of maximizing tax-free and after-tax assets often carries with it the cost of higher current income tax liabilities, which is why it’s important to strike a balance that works for each client and minimizes their current and future tax consequences. I personally like to set up my clients’ holdings so that their pre-tax RMDs are minimized, while their after-tax and taxfree assets are positioned to grow substantially.

FINANCIAL EXPECTATIONS

For some self-employed individuals, retirement account assets become the lion’s share of the financial resources available to them in retirement. For others, not so much. Understanding how significant the anticipated value of a client’s retirement assets will be, and how they’ll play into their overall personal financial goals and well-being, will undoubtedly affect your retirement planning recommendations. For example, a self-employed individual whose retirement will largely be funded by qualified plans and IRAs may require the relatively larger contributions permitted by a solo 401(k) or defined benefit pension plan. On the other hand, a business owner who plans to meet their retirement living expenses largely through the sale or public offering of their business may very well benefit from more modest programs, like IRAs and SIMPLE IRAs.

Of note, always be sure to consider a client’s actual and projected pension benefits (if any), Social Security benefits, and spousal assets when developing your recommendations for self-employed retirement programs.

ASSET ALLOCATIONS

Lately, we’ve seen almost daily how growth and technology stocks outperform value stocks and then the next trading day the opposite is true. The stock and bond market volatility we’ve witnessed throughout 2022 simply reinforces my belief in the practice of building a diversified investment portfolio with allocations across a mix of domestic and international equities, fixed income, real estate, commodities, private equity, and more.

However, asset location, as much as asset allocation, is a significant part of the tax planning strategy for your clients. It’s important to practice minimizing income taxes by strategically placing specific investment assets into pre-tax, after-tax, and tax-free vehicles. This could be as simple as determining to hold municipal bonds in aftertax accounts and corporate bonds in pre-tax accounts. You could also be more nuanced by guiding your clients to hold low-cost index funds in after-tax accounts and actively managed investment funds in pre-tax accounts.

The point here is that helping your clients allocate funds to not only the right investments for their risk tolerance and financial needs, but also into the right vehicles to maximize the tax benefits of each of those types of investments, is a great opportunity to bring added value to your clients. And the beauty of the investment marketplace today is that there’s almost certainly a tax-efficient vehicle for every asset class we’d likely recommend.

DISTRIBUTION RULES

Starting in the 2022 tax year, IRAs and other qualified plans will utilize a new set of life expectancy tables for account owners and beneficiaries to follow when calculating their RMDs. These tables

replace the ones in use since the early 2000s, and reflect our increasing life expectancies, therefore resulting in smaller RMDs (anywhere from about 1% to about 8% between ages 72 and 102).

While other distribution rules changes are largely designed to encourage withdrawals from qualified plans and IRAs as early as age 59½ until the first RMD (in most cases at age 72), it’s important to remember there are meaningful exceptions. For example, qualified plan assets can be withdrawn as early as age 55 with no penalty by former employees who separated from service with the employer sponsor of the plan. In addition, section 72(t) of the Internal Revenue Code permits penalty-free withdrawals from IRAs at any age as long as the payments to the IRA holder are substantially equal and continue for the longer of either five years or the period of time from the first withdrawal until the account owner turns 59½. These exceptions to the typical age 59½ withdrawal requirement can provide almost any account holder with added financial flexibility for anything from emergencies to fullblown retirement income.

As the number of entrepreneurs grows across the country, I see a growing opportunity for CPAs to enhance their offerings while adding more value by providing self-employed clients with the long-term business, tax, and retirement planning strategies they need to succeed both in business and life.

Andrea Wright, CPA Partner, Johnson Lambert LLP

How to Cook Up Tasty Training for Your Team

Continuing professional education might be required for your accounting and finance staff, but that doesn’t mean it needs to be bland. Here’s how to spice up your team’s professional development.

Think about the best learning experience you’ve ever had. Was it an elementary school teacher patiently teaching you long division? What about a college professor challenging you to take a new business perspective? Or how about that simple, last-minute cooking tip that made your dish delish? I use this very prompt to kick off our learning and development discussion at Johnson Lambert’s orientation each year. The excitement, reflection, and energy that ensues always amazes me, but it’s also a reminder that all too often we leave all those feelings off the table when it comes to professional development. It’s time to change that.

Here’s my recipe for cooking up a winning formula for tasty training and professional development.

1. BE ENGAGING

We’ve all experienced “death by PowerPoint.” Put the wordy PowerPoints and dry presentations we’ve all been guilty of relying on away. We know that learners retain more information the more engaged they are. To spice things up, try these techniques instead:

• Discuss, don’t dictate: Rather than dictating what needs to be known about a topic, have your team tell you what they don’t know! Many webinar platforms offer breakout groups, whiteboards, or other collaboration tools to enhance discussion (and you can use these in a live setting, too)—use them to pinpoint your team’s real information needs on a topic and create a learning experience that’s collaborative and unique to them.

• Show, don’t tell: Do you want your new hires to really learn how to audit cash? Give them a made-up bank reconciliation and confirmation to see how they go about doing it. Better yet, have learners bring real-life examples from their projects to work through for some tried-and-true hands-on training that they won’t forget.

• Teach, don’t preach: Learning experts tell us that the best way to deeply learn something is to teach it. Have your team members explore new, relevant topics and then teach them back to their peers. Of course, this isn’t meant to be a lecture—have your “teacher” practice their engagement techniques at the same time.

These first few methods will increase your learners’ engagement and accommodate their different learning styles. Some people are visual learners, others are auditory. Many people learn best by doing. By incorporating all types of learning into your training, you’ll give

everyone an equal chance to consume new knowledge. What’s more, you can accommodate any seen or unseen disabilities in the classroom by creating an inclusive learning environment. Perhaps that’s as simple as turning on closed captions in a webinar or providing materials early to give attendees time to digest the content. The ultimate aim is to foster learning experiences where everyone’s tastes are satisfied, and everyone feels included and celebrated.

2. BE TIMELY

We were all inherently curious children once, happy to learn why the sky is blue–not so much as adults! We want to see the impact of training on our job responsibilities or skills right away. Am I right? To better appease your team members’ appetites, try these tips:

• Seek input: Before scheduling a training session, send out a survey asking what the attendees hope to learn and what they already know about the topic. This saves you from making assumptions and allows you to tailor the content to their needs.

• Sell it: Kick off each training session by getting your team’s attention. Answer the question every attendee has on their mind: “What’s in it for me?” Describe how their roles or responsibilities will be affected by the training. This is also an opportunity to provide transparency for any firmwide initiatives that may be prompting the training.

• Be relevant: I can’t stress enough how important it is to craft your training to your organization’s initiatives. Are you teaching your team how to do something they won’t be assigned to do for months? That’s a recipe for disaster—reschedule it. Training needs to align with your team’s current focus. Another common training mistake is teaching the entire team about something only certain team members need to know. Make sure you have the right people taking the right training at the right time.

3. BE EDUCATIONAL

This should go without saying, but your team needs to actually learn something from training. So, why does this need its own point? Too often, we don’t achieve this simple goal. Subject matter experts get so excited to share their knowledge that they share everything they know, all while losing the flavor of the core message. Serve up training like this:

• Know your recipe for success: Hold a conversation with the instructor, subject matter expert, and other stakeholders ahead of the training. Is success defined by all the attendees passing a test, or is the goal simply to see results through the team’s ongoing work product? Is there an organizational goal that’s trying to be achieved with this training, and is it measurable? Define your terms early to craft and serve content that meets those goals.

• Present the menu: Starting each session by stating what your team will consume and consequently be able to do at the end of the lesson can be a powerful attention getter—if presented properly. Use specific action verbs to state the goals, takeaways, and expectations: You won’t just learn something; you’ll define or analyze, etc. The more complex the training, the more ambitious the learning objectives should be.

• Less is more: Stay focused on the most important topics and trim the fat. Try following the 80/20 rule: If something is true 80% of the time, teach it that way. If people have questions about the other 20%, they’ll ask!

• Respect the limits: As much as we’d like training to satiate all our business challenges, rarely is it ever a silver bullet. Be realistic about what you can achieve, and remember to work within the limits of your organization and your team.

Following this fresh approach, you should be able to whip up a winning formula for your training programs that changes the perception about continuing profession education in your organization and positions you as an employer of choice. Blended well, your training menu will serve to foster an environment of creativity, curiosity, and critical thinking; show you’re invested in the ongoing development of your team; and fulfill each person’s unique taste for knowledge and advancement within your organization and the profession.

This column was co-authored with Hannah Price, learning and development manager at Johnson Lambert LLP.

Art Kuesel President, Kuesel Consulting art@kueselconsulting.com

Accounting Is More Than Technical Ability

It’s no secret that effective technical training is the basis for a CPA’s success. Most public accounting firms and public and private companies, regardless of size, invest in providing their accounting and finance professionals with a strong regimen of technical training, either internally or by outsourcing it to external providers. Beyond a CPA’s licensing requirement dictating continuing professional education, the justification for investing in professional development is simple: Employers want well-trained and capable associates serving their clients and stakeholders.

But technical training is just one of the many ingredients in the recipe for career success. Succeeding in business today requires more than technical expertise and knowledge—it requires effective communication, team building, leadership, relationship development, delegation, and performance management skills, and more. I like to call these non-technical competencies “success skills,” as they often directly tie to one’s advancement. As CPAs increasingly seek ways to move away from compliance tasks—and business leaders and clients demand more well-rounded, strategic advisors who add deeper value and can manage client relationships, build teams, and be excellent communicators with all stakeholders—these success skills are going to become increasingly important to master. Unfortunately, considerably fewer employers offer a curriculum in success skills. In many cases, these skills are left to “learn on the job” by observation of others. Too often, I’ve seen the “role models” of this informal training being far from ideal sources of wisdom— not to mention that observation alone generally perpetuates a lack of knowledge, or worse, undesirable behaviors.

Here’s where every CPA’s initiative needs to kick in. In many cases, you’ll need to seek your own training and development in the success skills that you wish to develop. If you find yourself in this position, you may be lucky to identify a pre-built curriculum that’s already targeted at current and future leaders in the accounting and finance profession. Examples of this would be the Illinois CPA Society’s Strategy Academy, fellow Insight columnist Jon Lokhorst’s Mission-Critical Leadership Experience, or (shameless plug) my Ascend Roundtable. These programs are designed to move CPAs toward becoming more strategic advisors that bring enhanced value to the clients and companies they serve.

As you seek training that addresses the topics of interest to you that you hope will help advance your career, consider developing yourself in the following foundational success skills:

1. Communication: Becoming a better communicator often starts with understanding how you communicate and how others respond to your communication style. Consciously

CPAs must reach beyond technical training to protect their relevance and position themselves for long-term career success as client and company demands change.

PRACTICE PERSPECTIVES MOVING YOUR FIRM FORWARD

working on being a good listener will also enhance your ability to effectively communicate with others—and help you thoughtfully choose the right communication channels for your messages, which should help you avoid or minimize miscommunications and misunderstandings. The bottom line is that communication is a critical success skill and developing yourself in this area will be of great benefit to you and those around you.

2. Personal and Team Leadership: Leading today seems trickier than ever, as the push for increased collaboration often conflicts with our increasingly dispersed work environments. In many ways, it can seem like simply being a functioning team member feels as essential as being able to lead and develop a team around you. But truly understanding the vision and goals of your organization and the unique dynamics of your team, and tapping into the right team members for the right tasks, all add up to being a high-performing leader in today’s business environment.

3. Delegation and Performance Management: In so many cases today, efficiency is gained through delegation and leverage. But when purposeful delegation is absent, you and your team members are robbed of important learning and advancement opportunities. Improper delegation could be even worse than no delegation, as it can create an endless cycle of misfires. I believe it’s critical for every leader and aspiring leader to develop effective delegation skills and learn to manage the development and performance of others (whether they’re a team member, contemporary, or even a client).

4. Coaching: Coaching is, understandably, often confused with mentoring. A mentor willingly shares their knowledge, skills, and experiences. A coach provides guidance specific to an individual’s goals and helps them reach their full potential. The

differences seem subtle but, to me, being a good coach distinctly means helping others answer their own questions and achieve their goals based on your guidance. I think effective coaching is a skill that has long-lasting effects on both those who coach and those being coached. Learning to be a better coach is going to be essential to you being able to effectively develop the talent around you throughout every stage of your career.

5. Relationship Building: Accountants are often stereotyped as being introverts who enjoy being tucked away to work on their numbers. Realistically, accountants are people-facing professionals, whether that be reporting quarterly financial performance to a board or presenting a tax return to a client. If you’re in a position that serves clients, you arguably need to continually work on your relationship-building skills. Looking beyond client service, relationship development is critical to bringing in new clients, meaning relationship-building skills should be highly coveted by those seeking a promotion to partner at their firm or CFO at their company. My tip: Being great at building relationships comes from discovering commonalities, which creates connection and builds trust between people.

Being a well-rounded CPA and accounting and finance professional today means reaching beyond the technical skills to build your success skills. If you’re lucky enough to be part of an organization that already supports your professional development in these areas, consider yourself ahead of the game. But if you’re not, there’s no time like the present to seek and build your own curriculum for success. The more that you embrace developing your skills beyond technical ability, the faster you’ll become a strategic advisor that accelerates through the ranks and takes our profession to the next level.

5 Steps for Establishing ESG Reporting Processes

Shifra Kolsky, CPA Senior VP, Chief Accounting Officer, Controller, Discover Financial Services shifrakolsky@discover.com

The business world’s increasing focus on environmental, social, and governance (ESG) reporting makes it seem like these are new topics for concern; however, the concepts of environmental sustainability, corporate social responsibility, and strong corporate governance are arguably anything but new.

The notion of corporate governance dates back to Britain’s first publicly traded companies in the 1600s. Andrew Carnegie’s 1889 essay, “The Gospel of Wealth,” laid out his philosophy that the wealthy have a moral obligation to be philanthropic and is seen as a precursor to the belief that businesses—and not just their owners—are obligated to give back to society. The first Earth Day was observed in 1970, and the U.S. Environmental Protection Agency was established by special executive order shortly thereafter. During the same era, we can point to the U.S. government’s first use of the term “corporate governance” in the Federal Register.

So, while these concepts have clearly been around for a while, what is new (and inconsistent I might add) is the reporting of a company’s activities in each of the ESG domains. In recent years, several organizations have produced frameworks and guidelines for ESG reporting. Some of these were established for the express purpose of addressing such disclosures, while others have taken it on as part of the growing demand for increased disclosure and transparency. These include the Global Reporting Initiative, founded in 1997 after the Exxon Valdez oil spill; the Sustainability Accounting Standards Board, founded in 2011; the Task Force on Climate-Related Financial Disclosures, founded in 2015 by the Financial Stability Board; and the World Economic Forum’s 2020 report on defining a set of common metrics related to sustainable value creation. And, as recently as March 2021, the U.S. Securities and Exchange Commission (SEC) set out its own proposals for requiring specific ESG disclosures in periodic and annual filings.

The SEC’s proposals suggest the need to build out several processes that many companies may not currently have, which will require a thorough assessment to determine the nature of the information that a company needs to track, the level of effort to gather such information, the skills required given the specialized nature of certain types of information, the third parties that need to be considered, the policies that need to be adopted, and even whether a company’s board has the right expert knowledge to provide appropriate governance and oversight.

Corporate finance professionals are increasingly being called on to lead companies’ ESG reporting processes. Here’s how to get it right.

Regardless of how the SEC proposals evolve—or which particular reporting regime a company is either obligated to or willfully adopts—companies will ultimately require a robust reporting process that can hold up to auditor scrutiny, is flexible enough to adapt to continuously changing requirements, and is sustainable and repeatable with a high level of consistency and efficiency.

Is it any surprise that CPAs are being called up for the task? Given their long history of focus on internal controls, finance professionals are increasingly being tasked with establishing effective control structures related to ESG reporting that will stand up to the heightening scrutiny.

My colleague, Sharon Mathews, director of Discover Financial Service’s Finance & Corporate Services Risk team, was called on to do just that.

“This process feels like a throwback to the early days of the Sarbanes-Oxley Act of 2002 (SOX), where we had to educate everyone as to the purpose of a well-documented control framework. We had several process owners who had never been exposed to external reporting. They required some basic training to help them understand the differences between substantive and control assurance. We had to teach them what good supporting documentation looked like, as well as how to design a control that could be efficiently executed, easily documented, and subsequently tested for effectiveness,” Mathews recalls.

Based on her experience providing internal assurance on Discover Financial Service’s ESG disclosures, Mathews shares a few recommendations for others tasked with building their own ESG disclosure controls and processes:

1. Assess the current state: Start by learning about the intended disclosures, which frameworks they connect to, and how they relate to the company’s assessment of what is material to stakeholders. “With that overview, you can understand the specific disclosures relevant to your company,” Mathews says. Think about how key metrics are defined, what assumptions are being made about the data, and if there are specific data sets that should be included or excluded (and how well that is documented). Mathews notes that it’s critical to identify the providers of information and to set up time to walk through their process for gathering data for disclosure.

2. Work with the process owners: During the walkthroughs, ask questions to validate your understanding of measures and definitions. “Get an understanding of data flows, including sources, transformations, and any control points along the way. Then, draw out the process flow to help visualize key steps along the way,” Mathews advises. Your goal is to identify key areas of risk, where there may already be controls built into the process, or where controls are needed. Consider, too, the different types of controls that may be best suited to the process.

3. Leverage existing controls: Look for data sources that are already subject to other control regimes, such as systems used in financial reporting that are subject to SOX, or systems that are tested by internal or external auditors. If the process includes reviews or data checks, understand whether there are thresholds or other details used that can be clarified and documented as parameters within a control.

4. Establish consistency: “To build discipline into the process, design and document controls in a manner similar to other frameworks

used by your company,” Mathews suggests. “Then, set the desired frequency for producing the ESG disclosure measures to establish a routine that’s easy to follow and document.”

5. Establish a clear report preparation process: Mathews stresses the need for early alignment on optional disclosures and key metrics, so stakeholders are clear on all data requirements and expectations. From there, she suggests overcommunicating throughout the report preparation process: “Build a timeline with milestones and key review dates; ensure accountability for specific disclosures is unambiguous and well communicated; provide guidelines for stakeholders so they know what documents to provide as support and when; establish a designated party responsible for documenting a ‘tie-out’ to cross reference to supporting documentation; and, have a single point of contact for addressing and resolving questions, comments, and issues.”

While evolving ESG measures and SEC proposals are likely to lead us into uncharted territory, we finance professionals have many tried and true tools we can leverage to help establish a strong control environment and set our ESG reporting processes on the right path. Like SOX, ESG offers another opportunity for CPAs to establish themselves as the most trusted and strategic business advisors.

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

Did Illinois’ Landmark Sales Tax Legislation Level the Field?

Reviewing the Leveling the Playing Field for Illinois Retail Act 18 months after passage shows its impact depends on which team is on the field.

In the wake of the U.S. Supreme Court’s 2019 decision in South Dakota v. Wayfair, Illinois passed its so-called Leveling the Playing Field for Illinois Retail Act and enacted P.A. 101-0031. I discussed the legislation specifics in two previous Insight columns, “Illinois’ Incomprehensible Sales Tax Law,” and “Oops, They Did It Again.” Those titles give away my feelings on the law but, in short, it contained sweeping changes to address the disparity between the sales tax rates charged by local brick-and-mortar retailers versus online and out-of-state sellers. Fully in effect for around 18 months now, I thought it was time to call a timeout to review how things are playing out.

From my view up in the commentator’s box, it looks like the intent of the act is being subverted in some instances. Here’s why.

THE PLAYBOOK

Illinois’ Retailers’ Occupation Tax (ROT) is imposed on Illinois-based sellers of tangible personal property. The state tax rate is 6.25%, and the law authorizes additional locally imposed ROTs. That means the applicable tax rate for brick-and-mortar retailers in Illinois consists of a combination of state and locally imposed taxes in effect at the selling location— i.e., origin sourcing. A Use Tax (UT) may also be imposed on purchasers of tangible personal property at a rate of 6.25%. Currently, Chicago is the only city in Illinois to impose a local UT. Regardless, any applicable UT is either paid to the retailer by the purchaser, or if a purchase is made from a retailer who’s not required to collect tax (out-of-state retailers without nexus), the purchaser is required to pay the tax directly to the Illinois Department of Revenue (IDOR).

Prior to the Leveling the Playing Field legislation, out-of-state retailers with Illinois nexus were only required to charge and collect the 6.25% Illinois UT, giving them a price advantage over in-state brick-and-mortar retailers. The Leveling the Playing Field legislation was designed to address this disparity, but it does so in a confusing and, in my opinion, a constitutionally suspect manner.

The legislation originally established three retailer categories:

1. Remote retailers with no physical presence in Illinois but economic nexus under the postWayfair nexus standard. These retailers are required to charge state and local ROTs to their Illinois customers with the local sales tax rate determined by the Illinois customer’s point of delivery.

2. Out-of-state retailers without brick-and-mortar locations in Illinois but some sort of physical presence nexus. These retailers must charge their Illinois customers the state’s 6.25% UT or, if they fulfill orders from goods maintained at an Illinois location, the combined state and local ROTs in effect at the retailer’s fulfillment location.

3. Retailers with a brick-and-mortar presence in Illinois who may also have an online presence. These retailers generally charge the combined state and local tax rate in effect at their brick-andmortar location, with some exceptions.

And, there’s actually a fourth retailer category now: marketplace facilitators (i.e., Amazon, eBay, Etsy, etc.) and the third-party sellers who use their platforms. This category has its own level of complexity that couldn’t possibly be explored in this single column.

TILTING THE PLAYING FIELD

IDOR has done a good job of attempting to implement this complicated legislation. A detailed set of rules outlining the various factual permutations and resulting multiple tax results that can occur under the law was adopted, including a flowchart that illustrates the complexity of the law (see Part 131 - Leveling the Playing Field for Illinois Retail Act on IDOR’s website).

However, that said complexity has led to more creative tax planning by enterprising tax practitioners trying to subvert the avowed goal of the legislation—eliminating the tax rate disparity between brickand-mortar and online retailers. Strategic tax planning can create a tax rate advantage for multistate brick-and-mortar retailers over those with only an Illinois presence.

Certain multistate retailers have concluded, based on the particular facts of their selling activities, that sales to their customers shouldn’t be sourced to their Illinois brick-and-mortar locations, which would be subject to Illinois’ combined state and local tax rates. Rather, they source their sales to non-Illinois locations and fulfill the sales from out-of-state inventory shipped directly to their customers, resulting in just the Illinois UT collection liability of 6.25%.

This result, while contrary to the intent of the law is, in my estimation, authorized by the law and IDOR’s rules. IDOR has adopted sourcing rules for the various locally imposed taxes it administers and collects that are all essentially identical. For purposes of illustration, let’s reference the Non-Home Rule ROT rules.

IDOR states in Section 693.115(b) that a retailer’s “selling activities” determine the proper taxing jurisdiction. Further, Section 693.115(b)(1) states that “because the statute imposes a tax on the retail business of selling, and not on specific sales, the jurisdiction in which the sale takes place is not necessarily the jurisdiction where the local retailers’ occupation tax is owed. Rather, it is the jurisdiction where the seller is engaged in the business of selling that can impose the tax.” To the extent that a retailer is engaged in the business of selling outside of Illinois, there’s no local jurisdiction entitled to impose a local ROT.

Section 693.115(b)(2) then reaffirms what the Illinois Supreme Court held almost 80 years ago in its 1943 ruling in Ex-Cell-O Corp. v. McKibbin: The occupation of selling is comprised of “the composite of many activities extending from the preparation for, and the obtaining of, orders for goods to the final consummation of the sale by the passing of title and payment of the purchase price.”

Section 693.115(b)(2) also reaffirms the Illinois Supreme Court’s 2013 ruling in Hartney Fuel Oil Co. v. Hamer that “establishing where the ‘taxable business of selling is being carried on’ requires a factspecific inquiry into the composite of activities that comprise the retailers’ business.”

Section 693.115(c)(2) outlines the five primary selling activities test. Section 693.115(c)(3) provides that a retailer engaging in three of the five primary selling activities in one location shall charge the local taxes imposed at that location. If a retailer engages in three of the five selling activities outside of Illinois, then no state or local ROTs are due, meaning the transaction is subject to just the 6.25% Illinois UT.

Certain multistate brick-and-mortar retailers have arranged their selling activities so that at least three of the five bright line selling activities in IDOR’s sourcing rules occur outside of Illinois. Essentially, this means that their brick-and-mortar locations in Illinois are simply showrooms where no actual sales take place. This allows these retailers to avoid charging any locally imposed ROTs and charge only the 6.25% Illinois UT on sales to Illinois customers.

Obviously, such a result is contrary to the intent of the Leveling the Playing Field legislation. A clear competitive advantage is provided to multistate retailers versus their competitors who only have Illinois brick-and-mortar locations and can’t move their selling activities out of Illinois.

There are other examples of ways in which retailers can modify their behavior to avoid charging a local ROT. In the case of a remote retailer with economic nexus, the retailer can establish a physical presence in Illinois. This could be done by simply sending salespersons into Illinois to meet with potential customers. Establishing a physical presence converts the retailer’s tax obligation from state and local ROTs based on customer location to just the 6.25% Illinois UT.

Additionally, companies engaged in purchases of significant amounts of tangible personal property can have purchases delivered to their low-tax locations or establish purchasing companies in low-tax locations to make all purchases from vendors for resale.

So, has the playing field been leveled? While many online purchases are now subject to a local ROT, as illustrated above, there are workarounds authorized under the law that retailers can strategically leverage to their advantage. Many Illinois retailers are still competing on a tilted field.

Elizabeth Pittelkow Kittner

How to Fortify Your Organization Against Fraud

Companies lose billions of dollars to fraud each year— yours need not be one of them.

When we think of fraud and threats to our organizations, we usually think about outside perpetrators finding and preying upon our vulnerabilities. However, oftentimes the greatest threats are internal. Occupational fraud happens when employees perpetrate frauds against their own organizations. In fact, occupational fraud costs companies billions of dollars each year.

The Association of Certified Fraud Examiners (ACFE) report, “Occupational Fraud 2022: A Report to the Nations,” summarized 2,110 cases of occupational fraud in 133 countries. The total losses studied were more than $3.6 billion, with an average loss per case of $1,783,000. It is further estimated that organizations lose 5% of revenue to fraud each year.

You may think that such fraud could only impact large organizations, but the ACFE report notes that organizations with fewer than 100 employees had the highest median loss of $150,000, while the largest organizations with more than 10,000 employees had a median loss of $138,000. While the loss figures are close, the impact to smaller organizations is more likely to feel even larger.

When we examine the research on occupational fraud, we can learn insights to help us put proper controls in place, so we can better prepare our organizations to both discourage fraudulent behaviors and find fraud faster when it does occur.

Some new concerns we need to be mindful of that were highlighted in the 2022 report include cryptocurrency considerations and effects of the pandemic. Some bribery and kickback payments were made in cryptocurrency, some conversion of misappropriated assets went into cryptocurrency, and some proceeds of fraud laundered used cryptocurrency. More than half (52%) of respondents said at least one pandemic-related factor existed in their fraud cases, pandemic-related organizational staffing changes being the most common.

One compelling revelation from the report is that 85% of fraudsters demonstrated behavioral red flags, with eight distinct behaviors being observed in 76% of cases: living beyond means, financial difficulties, unusually close association with vendor/customer, control issues, irritability, bullying, family problems, and “wheeler-dealer” attitude.

Respectively, living beyond means and financial difficulties have been the top two red flags in every ACFE fraud report published since 2008. However, additional red flags more common in the C-suite are noteworthy, including bullying or intimidation, control issues, wheeler-dealer attitude, excessive pressure from within the organization, and past legal problems.

Another interesting revelation is that the median losses caused by men ($125,000) was only 25% higher than the median losses caused by women ($100,000). In each of ACFE’s prior studies, median losses caused by men were at least 75% higher. The ratio of men fraudsters compared to female fraudsters continues to remain high, with 73% of perpetrators being male in the research.

CPA, CGMA, CITP, DTM Head of Finance, International Legal Technology Association

The report also shows that fraudsters are colluding more now than 10 years ago. In 2012’s report, 58% of cases studied were perpetrated by just one perpetrator and 42% by more than one perpetrator; these statistics reversed in 2022’s report. One reason perpetrators may be acting together more may be to override controls in place.

Fraudsters who collude usually generate higher losses than those who act alone. The median losses for one, two, and three or more perpetrators, respectively, is $57,000, $145,000, and $219,000. Additionally, in approximately 50% of cases studied, fraudsters experienced negative HR issues prior to or during their frauds— fear of job loss, poor performance evaluations, and denied raise or promotion being the three most cited.

Control weaknesses are a significant contributor to occupational fraud. The most common failures include lack of internal controls, override of existing controls, and lack of management review. In other words, effective controls are key to preventing fraud. A few suggestions from the ACFE’s Fraud Prevention Checklist in the report include:

1. Hold ongoing anti-fraud training for employees: Employees need to know where to go for advice when they encounter uncertainty or unethical behavior in decision-making, and they need to feel that they can speak freely.

2. Implement effective fraud reporting mechanisms, like anonymous hotlines: Employees need to feel they can report activity anonymously, confidentially, and without fear of retaliation.

3. Perpetuate honesty and integrity at the top of the organization: Employees can be surveyed to see if they believe management is acting truthfully, ethically, and with accountability.

4. Enact an open-door policy that allows employees to speak freely about pressures: Employees should know who they can talk to within the organization to seek advice.

5. Conduct anonymous surveys to assess employee morale: Employees like to be heard and feel that their voices and contributions matter; organizations can take steps toward improving employee morale if they know it is an issue.

Backing the effectiveness of these tips is the fact that frauds are largely detected by employee tips or internal audits. Further, the faster the detection of fraud, generally the lower the loss. For example, passive detection, like by accident, via notification from law enforcement, and from confession, is usually slow and results in higher losses. Active detection methods, like automated transaction and data monitoring, statistically yields faster detection and lower losses. Organizations with effective, anonymous hotlines are more likely to detect fraud faster—70% of victim organizations within the ACFE research had hotlines, and losses were double at organizations without hotlines. Training on using hotlines and reporting fraud further increases the likelihood that frauds will be reported via tips.

Once an organization experiences fraud, it is more likely to modify its anti-fraud controls. The report showed 81% of organizations modified anti-fraud controls after fraud occurred. Organizations that experienced higher losses were also more likely to update their controls after experiencing fraud.

The ACFE’s report indicates that nearly half of frauds reviewed were preventable if effective controls existed. My recommendation is that you examine preventative and detective controls at least annually to ensure the appropriate policies, procedures, and protocols exist to protect your organization’s finances and reputation.

CPA firm in growing Southern Illinois community grossing just under $400,000. Tax and accounting make up the primary business volume but there are also some small governmental audits.

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4 Steps for Developing Initiatives That Move the Needle

BY EMILY BARTLETT,

It was mid-2013, and I had finished my fifth busy season in public accounting as an auditor. I was moving up the ranks and earned a promotion to the senior level, but I was still unsure of where my career was heading. I had seen some of my closest female colleagues leave the firm at an alarming rate, which led to reservations as to whether I could succeed long term as a woman in public accounting. Since I had never been one to doubt what I was capable of before, the questions and reservations I unexpectedly had meant I had to act quickly—the doubts needed to end.

Without fully knowing where to begin, I turned to one of my mentors for assistance and inspiration. What followed was her not only helping me launch the first women’s initiative at my firm, CDH, but she also helped me break down the planning process into four straightforward steps that made it—and me—a success. Here they are:

1. Research and brainstorm. To better understand our starting point, and to pinpoint our future expected outcome, we needed to perform some research. Our research included reviewing the history of women in the accounting profession, statistics of women in our firm specifically, and initiatives started in other firms and organizations that we could leverage. We then spent time with other stakeholders interested in advancing women in the profession to brainstorm ideas for a name and both short-term and long-term goals.

2. Create a vision and a mission. Once the initial brainstorming was completed, creating a clear vision and mission was imperative. This step focused on defining the purpose of the initiative and the desired outcome. Defining the mission allowed us to turn focused objectives into strategic goals and action plans. Our strategies included having a proper governance structure to oversee our action plans, as well as subcommittees to focus on specific areas of the initiative, like career advocacy, visibility of female leaders, and career/life integration.

3. Obtain support and buy-in from leadership. We knew support from leadership was needed to guarantee our initiative could make the impact we desired. To ensure that we earned the buy-in from the firm’s leaders, we put together a presentation that outlined the business drivers behind our initiative that would resonate with our audience. A few of the drivers we identified were the costs of turnover (both quantitative and qualitative), the connection to the firm’s vision statement and scorecard, and the firm’s ability to market itself positively.

4. Launch and revisit as needed. After receiving leadership’s support, we scheduled an official launch date to communicate our women’s initiative and its mission, vision, and goals to the rest of the firm. That was just the beginning, though. Today, we continue to meet as a full committee and with our subcommittees to revise and adapt our action steps as necessary to keep the “Women LEAD at CDH” initiative working toward the ultimate vision of embracing the leadership (L), empowerment (E), advancement (A), and development (D) of women within the firm.

While my experience following these steps was connected with creating and launching a firmwide women’s initiative, there are endless possibilities for innovation and change in the accounting profession. Whether it be for a short-term project or an ongoing initiative, following these simple steps could help you turn a passion or desire for positive change into an action plan that moves the needle, not just in your organization, but across the accounting profession.

Emily Bartlett, CPA, is a senior manager in CDH’s Assurance department and leads the firm’s “Women LEAD at CDH” initiative. She is an active Illinois CPA Society member and a winner of its 2022 Women to Watch Award in the Emerging Leader category.

These simple steps can help you turn your passion and desire for making a positive change in the accounting profession into a reality.

CPA

William K. Flowers, CPA

INSIGHTS FROM THE PROFESSION’S INFLUENCERS

BY HILARY COLLINS

If you have the pleasure of attending a Zoom meeting with William K. Flowers, CPA, the first thing you’ll notice is his virtual background. It’s a photo he took of the Count Basie Orchestra, the swing band founded in 1935, performing at the Birdland Jazz Club in New York City in 2020. Flowers is one of their biggest fans. “If you think it’s corny, you might as well know that about me right from the start,” he chuckles.

You might not think of music when you think of accounting, but Flowers has found a way to combine his passion for music (including jazz, a cappella, and, more recently, classical) with his CPA knowhow. “I’ve always loved the discipline of accounting,” Flowers says. “However, what I didn’t love so much was the corporate world and the constant push for growth and profit, the constant cost-cutting. I found that I was getting more satisfaction from the volunteer work I was doing in the evenings for nonprofits than the work I was doing from 9 to 5.”

That early-career realization propelled Flowers from the corporate world into nonprofit accounting, where he’s served musical groups and other nonprofit organizations for the past 30-odd years. He’s currently celebrating his 10th year as CFO of Cedille Chicago, a nonprofit organization that produces and markets recordings of classical music by Chicago-area musicians and composers. He’s also assisted the Jazz Institute of Chicago on behalf of CPAs for the Public Interest and served the nonprofit organization Chicago a cappella in several roles over the past 20 years, including as board president and chair of the finance committee.

But Flowers’ passion for nonprofit work extends beyond music: He’s also served as CFO for both Inner Voice Chicago, a nonprofit providing housing for the homeless, and Association House of Chicago, a nonprofit providing bilingual assistance programs. “When I decided to pursue nonprofit accounting, I saw it as a chance to still use my financial skills but to also contribute by assisting organizations that work with the youth, the arts, and the homeless,” Flowers explains.

Over the years, Flowers has held more than 20 volunteer roles with the Illinois CPA Society and was a founding member of its charitable partner, the CPA Endowment Fund of Illinois. “I was very active on the endowment board,” Flowers recalls. “It’s a great opportunity to be able to help young people, minorities, and students in general. In reviewing the scholarship applications, one of my primary responsibilities, I found that the stories were all so different. You have those outstanding students who in a sense don’t really need our help—they’ll definitely find a way—and then you have the students who really do need the extra push our support can provide. We truly are making something possible that might not otherwise be possible for them.”

After more than three decades of hard work in nonprofits, music, and accounting, Flowers has created a legacy to be proud of, capped by receiving the Illinois CPA Society’s prestigious 2022 Lifetime Achievement Award in recognition of everything he’s done in and for the profession. However, one suspects that even that distinction doesn’t hold a candle to another acknowledgement he received: The Count Basie Orchestra paid him tribute with a rendition of their famous theme song, “One O’Clock Jump.” (You can find it on YouTube.) It’s a fitting honor for a man who’s gone from a dreamer and admirer to financial advisor and friend. “I’ve always been a fan of music of all varieties,” Flowers says. “Then good fortune put me in touch with the right people and friendships developed—it’s just been wonderful.”

The Illinois CPA Society’s 2022 Lifetime Achievement Award winner has built a legacy by creating harmony between his passions and his profession.