MACPA Statement // Spring 2024

OCEAN CITY, MD

Time to latheron that CPE

Discounted

SPONSORED BY:

HIGHLIGHTS

Welcome Reception Ethics Course & 4 hours of Complimentary CPE on Monday

16 course options: 8 on Tuesday and 8 on Wednesday in Various Fields of Study

SPEAKERS:

Art Werner, J.D., M.S.

Daniel Bradley Bruce Shepard, CPA, MBA

MEMBER SERVICES

Lauren McDonough

Justin Chase

PEER REVIEW

Cora Edwards

PROFESSIONAL DEVELOPMENT

Natalie Antonakas

Kelly Brown

Chris Dougherty

Emily Trott

2023–2024 BOARD OF DIRECTORS

Christine Aspell, CPA Chair

Thomas White, CPA, CGMA Vice Chair

Maxene M. Bardwell, CPA, CIGA, CIA, CFE, CISA, CITP, CRMA Secretary/Treasurer

Herbert J. Geary III, CPA, CGMA Immediate Past Chair

Karl Ahlrichs, SHRM-SCP, SPHR, CSP

Jackie Cardello, CPA

Bo Fitzpatrick, CPA

Robert Goldstein, CPA

Michael Kimbrough, Ph.D., CPA

Gregory Repas, CPA

Brett Sanders, CPA

Savedra N. Scott, CPA, CGMA, CrFAC, MSA, MBA

SENIOR STAFF

Rebekah Olson, CPA CEO

Laura Swann, CPA CFO

Bill Sheridan, CAE CCO

Mary Beth Halpern Director Technical Services/ Regulatory Affairs

Dee Sullivan Director of Learning

Michelle Brown, M.Ed. Chief Growth & Innovation Officer

Continued economic, financial uncertainty for Maryland ahead

BY CHRISTINE ASPELL / MACPA CHAIR

The shocking March 26 collapse of the Francis Scott Key Bridge in Baltimore was a tragedy for the region. Within a week, it had also brought unprecedented economic, financial, and legislative uncertainty that will be felt well beyond Maryland’s borders for months — and possibly years — to come.

As state officials look to provide solace and support to the families of the six construction workers killed in the collapse, they’re also shifting their focus to the economic and financial stability of the region, and the nation at large.

Even before the bridge collapsed, fiscal concerns at a number of statewide levels had been putting pressure on Maryland legislators to find new sources of revenue. The spotlight centered squarely on state transportation funding. Plans to close an estimated $3.3 billion budget shortfall for Maryland’s Department of Transportation with deep cuts to all transportation-related agencies are being questioned by state and county officials throughout Maryland.

State lawmakers even briefly suggested implementing a sales tax on professional services — including those provided by CPAs — as one idea to help close the shortfall. That proposal ultimately was left out of this year’s budget talks after CPAs and other members of the local business community came out in strong opposition of the measure. This proposal would likely place a burden on small businesses, create additional compliance requirements for businesses, and harm Maryland’s overall business environment. To put this into further context, no states that border Maryland currently tax professional services. In a state like Maryland, where most people live close to a neighboring state,

this would increase costs by 5 percent and put businesses and residents in the state at a competitive disadvantage with neighboring states. Additionally, the sales tax is designed to be a tax on consumption; when business-to-business services are taxed, it becomes a tax on production.

“It’s added a lot of uncertainty into what was already an uncertain environment,”

Senate President Bill Ferguson told The Baltimore Sun.

State Comptroller Brooke Lierman tried to mitigate some of that uncertainty by announcing that her office will waive certain late payment penalties and interest for Maryland businesses through May 31, 2024, to help ease the economic impact of the collapse.

In Annapolis, meanwhile, there remained so much uncertainty that budget talks between Maryland’s House and Senate reached an impasse on April 1 — just a week before the planned end of the General Assembly’s 2024 legislative session. As a result, Gov. Wes Moore issued an executive order extending the session by an additional 10 days, giving lawmakers additional time to resolve their differences. That extension ultimately wasn’t needed, as lawmakers came to an agreement on April 3, crafting a final budget that introduces targeted tax and fee increases while avoiding a broad-based tax hike like a sales tax on accounting services.

EVEN MORE UNCERTAINTY AHEAD?

Given Maryland’s current economic and financial environment, we must accept that almost anything could be considered during the final days of this year’s budget negotiations, and certainly in next year’s General Assembly session — including,

potentially, the reintroduction of a sales tax on professional services.

Indeed, we’re expecting it — and we’ll need your help. Here are three key ways you can support the MACPA’s legislative efforts:

• Stay vigilant: Follow our legislative updates in our Connect communities and on our blog. We’ll keep you posted as developments warrant.

• Join us at CPA Day: The 2025 edition of CPA Day in Annapolis will be held on Jan. 16. Mark your calendars and save the date. Join us there in person. It will be more important than ever to turn out in force and make our voices heard.

• Support our PAC: Issues like this are perfect examples of why supporting our political action committee is more important than ever. Through contributions from members like you, our PAC is able to work toward favorable outcomes on legislative issues that affect CPAs, educate legislators about matters that are important to the CPA profession, and keep MACPA members informed. Your generous contribution will help ensure Maryland CPAs have a voice in Annapolis and will help ensure a vibrant CPA profession in the future. Learn more and donate today by visiting MACPA.org/advocacy.

To those who have supported our legislative efforts in the past, and to those who will be joining those efforts in the future, I thank you. We are a stronger profession for the work you do, and I look forward to standing side by side with each of you in Annapolis as we continue to protect our profession, our clients, and our state’s economic and financial future.

ABOUT A.I. GET SMART

Most CPAs still aren’t using it, but artificial intelligence offers countless opportunities to save time, attract talent, and better serve clients. Here are some ideas for getting started.

BY BILL SHERIDAN, CAE

Artificial intelligence has made huge strides as a business tool over the past 18 months. Its swift advancement has opened new doors for professionals across various sectors, including accounting and finance.

Despite the promising potential of A.I. to transform their practices, many CPAs find themselves at a crossroads, grappling with the challenge of integrating this technology into their work. In a recent virtual town hall meeting, 64% of the more than 300 MACPA members in attendance said they haven’t spent any time yet working with ChatGPT or other A.I. platforms.

But the journey to leveraging A.I. in accounting isn’t just about embracing new tools; it’s about rethinking our approaches to problem-solving and client services. The first step into the A.I. world for CPAs is to simplify their approach. Instead of getting overwhelmed by the complexity and breadth of A.I. technologies, professionals should focus on identifying the specific problems they aim to solve. This problem-centric approach encourages a more targeted exploration of A.I. tools, ensuring that the adoption of technology is both strategic and effective. By demystifying A.I., CPAs can more easily identify how it can enhance their services and where traditional methods may still hold sway.

Don Tomoff, a seasoned expert in the field, underscores the importance of practicality in CPAs’ adoption of A.I. A CPA himself and the founder of Invenio Advisors LLC, Tomoff sat down with MACPA Chief Communications Officer Bill Sheridan recently to talk about how CPAs should be thinking about A.I. out of the gate — the things the technology is good at in our world, areas where it still struggles and, perhaps surprisingly, how we can use A.I. to help with our capacity and staffing issues.

The bottom line is this: The path to integrating A.I. into accounting practices requires a thoughtful blend of simplicity, curiosity, and practicality. By focusing on solving real problems, understanding the capabilities and limitations of A.I., and prioritizing client needs, CPAs can effectively harness the power of A.I. to elevate their services. Tomoff’s advice offers a practical roadmap for CPAs embarking on this journey.

The full conversation can be heard in episode 204 of the MACPA’s “Future-Proof” podcast. What follows below is a lightly edited transcript of that conversation.

Don, I want to start by getting your impression of a couple of things I’ve heard in the A.I. world. The first was from a gentleman named Daniel Anstandig. He’s the founder and CEO of a group called Futuri Media. I heard him speak at a conference not long ago, and among many other provocative things that he had to say, he said this: “The A.I. asteroid is coming for us. Companies that have not meaningfully incorporated A.I. into their operating strategies by 2030 will be extinct.” What are your thoughts when you hear predictions like that?

There’s also a lot of fear and uncertainty, and we don’t control any of that. What we do control is how we can take advantage of this technology. What problems can it solve for us? It’s easy to get overwhelmed and say, “I don’t know what to do.” Accountants especially tend to wait and see what others are doing; what problems have they solved? Remember the conversations about the cloud and digital transformation back in the day? We’ve been hearing about this stuff forever. This is moving so fast that one of the observations I always make is this: How big of a lead am I willing to give my competitors? Because they’re moving.

Statement: It’s that whole “risk of not investing” conversation, and in cases of things like this, that risk is really, really high.

Tomoff: I just had a conversation with a CFO recently. He said adopting A.I. and trying to figure out what it’s going to do for me, for my organization is a lot like investing in stocks. You’ve got to have a sense of anticipation. You’ve got to be willing to be wrong. You’ve got to understand the ethical implications. The phrase we hear a lot these days is responsible A.I. — you got to be willing to do things that are not what we’re traditionally valued for.

Statement: I also want your view on a study that came out of Brigham Young University recently, specific to accounting. There was a professor of accounting there who wanted to take a close look at ChatGPT’s capability when it comes to accounting. They found that it is significantly worse than humans at things that involve a lot of math. Their point is that ChatGPT is great as a predictive text program and less great when the answer requires exact output rather than a predictive one. Their point is that A.I. may not be a great solution when it comes to accounting problems. I’m wondering what you think of that.

Tomoff: Early on it wasn’t really good at math, but they’ve been adding a lot of features — I’m speaking of ChatGPT specifically. They have this feature called advanced data analysis, and it’s beautiful at math. It’s not perfect, but it is beautiful. As a senior executive or a partner in a firm, you might give someone data and say to a manager or a staff person, “I’d like to see an analysis on this.” They then put it all together and come back with a narrative and a summary. That senior level person now has the ability, using advanced data analysis, to get a preliminary analysis in five minutes. They don’t have to do anything other than load the data into an A.I. and say, “What kind of data do I have here? What kind of analysis would you recommend?

And by the way, please generate that analysis.” Suddenly, you’re 80% down the road before you even start pulling together an analysis you might give to someone on your staff. It’s happening at a senior level instead of handing it down to someone else to get done. I think the advanced data analysis tool has kind of eliminated that conversation.

Statement: It stands to figure that would be the case, knowing that artificial intelligence learns and continually gets smarter.

Tomoff: And Bill, you just touched on something important: A.I. doesn’t really have any knowledge. That’s a point I always try to make. It’s just an algorithm determining what the next likely response will be. When I talk about advanced data analysis, what’s really happening is when you pose a question, a coding language called Python is doing all the work in the background. I don’t know Python, but it’s doing all the work and self-correcting and going down the road for you.

Statement: While most CPAs have heard of ChatGPT and other A.I. tools by now, few have actually started using it. What kind of advice do you give CPAs about where to start or where to turn first?

Tomoff: It starts with identifying where you have low-hanging fruit or what I call “layup ideas.” I spend a lot of time with data analytics and Excel and Power BI. Well, if we spend time in Excel — and all accountants do — start there. If you’ve ever had to understand a formula, figure out what A.I. can do for you there. It’s going to slice more time than you can imagine off of the opportunity to move your people more quickly through their work. And Bill, to your point, if I’m a senior person in a firm and I don’t use these tools every day, I think it’s important to understand that this is what your team can do with it. And I absolutely believe that firms that are progressive and are adopting this will be attracting people — and if you’re not doing this, you will be losing people because they won’t want to work where they’re not going to be growing in this area.

Statement: It’s almost becoming cliche now, but I think it’s probably true: You are probably not going to lose your job to A.I., but you very well might lose your job to another CPA who is using A.I.

Tomoff: Think of it this way: If you’re in hiring mode and you understand A.I. and what it can do and the possibilities it offers, are you going to lean toward hiring somebody who’s comfortable working in this arena and has the skills, or are you going say, “I don’t need that?” And especially senior people. I’ve heard senior people say, “I just need to retire. I’m this close. I don’t want to worry about it.” To which I say, “That’s nice, but the rest of your team is not getting ready to retire.” You’re sending the wrong message to the rest of the organization.

Statement: You mentioned starting with what you know and use, Excel being a great example. What does A.I. do well? What should CPAs be thinking of in terms of how they can best put something like this to use?

Statement: Tomoff:

Tomoff: There are three things I focus on. Don’t ask for its opinion on tax regulations and run with it. You have to know what you are looking at. You have to be able to interpret it because it will make things up. It will just shoot out totally incorrect information. But one of the things that I’ve used it for is modeling with clients. In that, there’s a lot of automation that has to happen. I’m not a macro guy in Excel — I know how to apply them, I know how to use them, but I can’t write them. So I would outsource that piece when I got into complicated things. Since January, I haven’t had to outsource a single piece. Through what’s called Natural Language Query, I can get it to do what I need it to do.

I think of it in terms of three things: First, it accelerates what we currently do. You know this from creating presentations and how much time it takes to pull that stuff together — A.I. will slice that process literally by a tenth. You’re just creating an initial start for that task far faster than you or I can think of it. It’s creating that initial start and therefore accelerates what we do.

Next, it enables what we don’t currently do but should be doing. I’ve posed this question to CPAs: How many workbooks do you have or processes that you know should be documented, but you haven’t done it because you’re too busy. If you see a really complicated formula in a client workbook, the process in the past has been, “Let me start breaking this down and understanding what’s happening.” Auditors do that on a regular basis. Now you just ask A.I., “What is this doing?” and it lays it out perfectly for you, and you can document. If you’re building a workbook or a process, have A.I. lay it out for you. It’s so much quicker than what we did before.

Lastly, it allows what we can’t currently do. This is the one that most people are missing. There are things we do not have the skills to do, and A.I. will give us the opportunity to actually do them. An example which we just touched on is advanced data analysis — a senior-level leader taking raw data and getting an analysis. They don’t need to know how to lay out the data — A.I. does it for them. They don’t need to know what analysis to get because you can ask the A.I., “What type of analysis would be useful on this data?” It will give you ideas. It’s great at things like that. But the key is to always stay close to the things you know well because it gets things wrong all the time.

Statement: You just touched on the idea of just getting started, and A.I. is great for getting that start — getting a few ideas for what you’re going to write, for instance, or for how to

“There’s also a lot of fear and uncertainty, and we don’t control any of that. What we do control is how we can take advantage of this technology.”

analyze that data. Suddenly, you’re not spending an hour trying to get words or ideas on a page. You can move right into what you want to do.

Tomoff: I read a quote from someone on LinkedIn recently who said, “A.I. is not as creative as humans.” I believe that. But what you just touched on is important: It can come up with 300 ideas in 30 seconds. It takes us three days to do that. That makes your starting point a lot easier.

Statement: It seems to me that a key skill for the A.I. age is the ability to ask really specific, well-formulated questions that are going to allow the A.I. to deliver what you are looking for. This technology forces us to get good at understanding what we’re trying to solve for.

Tomoff: What you’re diving into is called prompt engineering — being able to write prompts. It’s a matter of “tapping the pipe” — trying to find that sweet spot.

For example, I just did this with a client yesterday, a tax sole practitioner client of mine. I was trying to do a depreciation runout schedule, and the client couldn’t figure out how to get the last piece to work. I looked at it and said, “I don’t have the brain power to try and figure this out right now … let me ask ChatGPT.” I gave ChatGPT an image of that part of the Excel file, and I told the A.I., “You are a Microsoft Excel formula expert. Please review this image and explain what I have here.” No problem — it looks like a depreciation runout schedule. Then you start leading the A.I. where you want it to go to get the final formula. I could have gotten there by manually figuring it out myself — we’ve all been there. But it’s way easier just to talk to an A.I. and say, “No, that’s not what I need, but I’d like you to do this,” and it’ll correct. It’ll keep going until you get what you need. And when I say it either works or it doesn’t — when I put it into Excel, does it do what it’s supposed to do? It’s either yes or no. There’s no gray about it.

Statement: Are there any areas related to our profession where you’ve seen it struggle? Where are the gaps?

Tomoff: Let’s say you are doing data analysis and you’re asking it to do certain things. There are some things — analysis, et cetera — where it just will not get you where you should be specific to our profession. For example, we’re not going to be able to feed it an entire lease accounting standard because there’s too much volume there. But here’s what we can do. Let’s say I need to explain how to adopt leases to my client. We can ask our A.I., “Can you please give me a 500-word summary outlining the process,” and it gives it to you. If you understand the lease accounting, you might say, “That’s spot on, but I need to tweak it here or there.” I think too many people believe it’s going to give me exactly what I need. It won’t most of the time. You just have to be patient, keep changing and adapting, et cetera. It requires a change of mindset for us. I’m continually amazed by what A.I. is able to do for me, just by my having the imagination to ask, “Can I do this?” It leads me down a road where I eventually say, “Oh my goodness, I had no idea.”

“You’ve got to have a sense of anticipation. You’ve got to be willing to be wrong. You’ve got to understand the ethical implications.”

Statement: That question: “Can I do this?” We’ve come to a point now where the answer is almost always, “Yes.” Maybe a better question is, “How do I do this and how can A.I. help me?”

Tomoff: Just an aside, bill — and this is fascinating to me. I think about this from the perspective of what’s going to be coming into the profession. In October, I went to homecoming at Penn State, and I had an opportunity with my son to talk to a couple students. Now, my belief is that everybody in college is using A.I. If they’re honest, they just are. So we were talking to these two students and I asked them, “Are you using it?” And first they looked at me like, “Are you a professor or something?” Then they said, “Yeah.” And I said, “How are you using it?” They gave some examples, and then I said, “Alright, one last question: Are all your friends using it?” And this student looks at me like I’m crazy and says, “Um … yeah.” Like, no kidding, of course they’re using it. And yet you can walk into so many businesses today it’s like it doesn’t exist in a lot of cases. Either firms are not letting people use it or they’re just not supporting it.

Statement: We were just down this path with social media 15 years ago, and yet here we are again.

Tomoff: (Laughs.) That’s exactly right.

Statement: There are implications related to A.I. for our pipeline and talent struggles as well. These students — all of whom are using A.I. right now — are about to enter a workforce in which the organizations that hire them may or may not be using it and may or may not allow them to use it. That’s going to affect their decision on whether they come to work for you. At the same time, there are a considerable number of organizations in our profession that are turning down work because of capacity issues. Can A.I. can help in that area? How do those two things tie together?

Tomoff: A.I. can absolutely enhance your ability to bring in talent, especially if you are a progressive, forward-thinking organization and you’re taking advantage of A.I. Anybody in the younger generation who is motivated will understand A.I. They will also want to know that your organization will be a place where they can grow their career and give themselves opportunities to grow. First of all, it’s a talent recruitment and retention tool. That’s a big win by itself. The tone you set in your organization will bring in talent. If you’re more progressive and

you’re going where other firms aren’t going, people will want to work there and stay there.

I read an article recently that described five things firms are doing to adapt to the staff shortage. The biggest item on that list, in my mind, is that they’re adopting A.I. If you have a talent shortage, there is no bigger, more obvious thing you should do than stay on the cutting edge and train your people to use new technologies like this.

Boston Consulting Group did a study recently in which they asked people who use A.I. to work on a sample project. They found that productivity and quality of work increases by up to 40% for people who use A.I. versus those who don’t. Let that settle in for a second and then convince yourself that you don’t need to be there. I don’t know how one looks at a study like that and doesn’t immediately say, “I’ve got to figure this out.”

Statement: From a recruitment standpoint, it seems like it’s less about A.I. specifically and more about your mindset and culture as a firm. You have an advantage if you can say, “We are going to stay on the cutting edge. We’re going to keep trying new things in an effort to improve our firm and the services that we provide for our clients and customers. That’s the kind of firm you’ll be joining if you come work for us.”

Tomoff: And the kind of firm that you’re going to want to work with. Your clients are dealing with the same issues. They want people who are bringing them solutions for this tsunami of disruption. We’ve been around long enough that we can look at the pace of change and say that we’ve never seen it like this.

Statement: Moore’s Law holds that our computing power doubles every year and a half to two years, and A.I. is doubling in power every three months or so at this point?

Tomoff: It’s crazy … and scary. It really is. You can easily get overwhelmed with it all. That’s why I always try to break it down to focus on what’s right in front of you.

Statement: And that’s a great place to start: What problem am I trying to solve?

Tomoff: My favorite tip, Bill, is when people say, “I saw this article on one hundred tools I need to use.” First step — toss that article. Start with Bing, or Gemini, or ChatGPT, or Claude Those are the four GenAI tools that I think about and most people are familiar with. Pick one and familiarize yourself with it, and then maybe stretch it to another one and compare. The best way to move a mountain is one shovel at a time.

Statement: What are some logical first steps for folks who are just dipping their toes in for the first time? Where do they start?

Tomoff: Get an account with one of those four GenAI tools — Bing, which is Microsoft’s A.I.; or Claude; or Gemini; or ChatGPT. And if you choose ChatGPT, I would recommend getting a Plus account, which is $20 a month. If you want to be in the game, you want to be on ChatGPT Plus so that you’re working with the broadest array of tools you can.

Statement: What are some other resources, more information, or other great places to go to get questions answered? Where do you like to start?

Tomoff: I’m a LinkedIn believer and there are a number of people on LinkedIn that I’d recommend following. Allie K. Miller is an A.I. influencer. Glenn Hopper is another person worth following. He and I have been working with Tom Hood and his team on some stuff. Glen is a CFO and he talks about how A.I. can be used in the finance world and has done some really interesting stuff. There are all kinds of people who are worth following. Search for some relevant hashtags across either Twitter or LinkedIn and find those who are offering good information day in and day out, and then try to absorb as much as possible. You don’t have to understand all of it. You just have to be aware.

I gave an example earlier related to creating code. I led a session recently with an accounting firm, and there were about 150 people in the room. I asked them, “How many people use VBA (Visual Basic for Applications, a programming language developed and owned by Microsoft)?” One person’s hand went up. I could take somebody who’s never written in VBA and, using A.I., in an hour I could have you writing macros. As I was leaving the session, I received a LinkedIn message from a manager in the audience, and he said, “I’ve already signed up for (ChatGPT Plus).” Within an hour of that, he had already automated three things that facilitate what he does, having started from Ground Zero. That’s the speed that things are moving if you can embrace it.

Statement: It starts with curiosity, right? How can this help me?

Tomoff: Absolutely.

Statement: What does the future of accounting and A.I. working together look like to you?

Tomoff: I’m really excited about it. I know a lot of folks are worried about what it’s going to mean for our jobs. Here’s what I think it’s going to mean: One, we’re in a profession where we all can use free help because we don’t have people flooding our workforce to do this work. We’re in a position to take advantage of A.I. and continue to perform because we’re then free to do the things we’re really good at. If you’re adding value with 25% of what you do and compliance takes up the other 75%, how do you get that to 50-50 and grow the areas in which you’re adding value. A.I. presents a huge opportunity for that.

And Bill, like you said earlier, it’s only been a year and a half (since ChatGPT’s emergence). Think about what’s going to happen in the next year.

Statement: When you frame it that way, your head starts spinning, but more to the point, you start to get excited about the possibilities. Any other advice that you’d offer us A.I. newbies?

Tomoff: Make sure your expectations are realistic. A lot of folks, when they start working with A.I., if they get a bad answer, they might say, “This sucks and I’m done.” It’s the old accountant stereotype that says it’s either right or it’s not. And you might say, “If it’s not right, what do I use it for?” The cliche is that we have to get comfortable being uncomfortable. I hate that phrase because I don’t think we’ll ever get there, but what I will say is we have to be comfortable with ambiguity and trust that this is going to pay off in the long run.

Statement: Amazing stuff. Don, thanks so much for joining me.

Tomoff: My pleasure, Bill.

Bill Sheridan, CAE, is editor of The Statement and chief communications officer of the MACPA.

Learn more about A.I.

Our new A.I. resource center is your gateway to the artificial intelligence resources to improve your work. Visit it here.

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NEWS & VIEWS

Maryland’s economy: Strong foundation tempered by slow growth, comptroller’s report shows

BY BILL SHERIDAN, CAE

A resilient U.S. economy crushed expectations by adding 353,000 jobs in January, leaving Americans asking: What happened to that recession that experts predicted would ruin 2023?

In Maryland, meanwhile, the unemployment rate recently dropped to the lowest rate of any state in recorded history. And while that sounds great on the surface, there are signs that Maryland’s economy is struggling ... and has been since well before the pandemic.

Maryland Comptroller Brooke Lierman has released the state’s first-ever State of the Economy Report, which found that Maryland’s economy has been largely stagnant since 2017.

Lierman was clear up front: “Maryland has a high performing economy and tops the nation in several key economic categories, including the highest median household income ($108,200) and the lowest unemployment rate (1.8%). Maryland also has above average productivity and one of the lowest poverty rates in the U.S.”

Still, there is room for improvement. Among the report’s findings:

• About 100,000 women have left the workforce since the COVID pandemic hit in 2020, “most of them at a peak working age and at a rate at least twice as high as the national average,” The Washington Post reported

• Maryland’s gross domestic product is growing at a fraction of the rate of the rest of the country. From between the fourth quarter of 2016 to the first quarter of 2023, Maryland’s GDP grew at just 1.6%, compared with 13.9% for the entire U.S. during the same period.

• Maryland employers are struggling to fill job openings. There are 3.1 job openings for every Marylander who is looking for work. Nationwide, there are 1.3 jobs for every job seeker.

The first-of-its-kind report is broken down into four sections — recent Maryland economic trends, labor force participation trends, population and migration trends, and state of the economy regional roundtable summaries, which illustrates the experiences of Marylanders as they navigate an evolving economy.

• Download the Maryland State of the Economy Report in its entirety.

NEWS & VIEWS

READ THE EXECUTIVE SUMMARY

The executive summary of the comptroller’s report offers a fascinating look at the various trends at play today and their impact on Maryland’s economy. That executive summary appears in its entirety below.

Maryland has a high performing economy and tops the nation in several key economic categories, including the highest median household income ($108,200) and the lowest unemployment rate (1.8%). Maryland also has above average productivity and one of the lowest poverty rates in the U.S. at 8.6% (the U.S. poverty rate is 11.5%).

Maryland’s economy is anchored by diverse, world-class employers and institutions that contribute to and support the vibrant communities where they are planted. The federal government plays an outsized role in Maryland’s economy compared to other states with a wide array of federal offices, military installations, and federal contractors located in the state. Maryland’s diverse industry mix, federal government influence, and highly skilled workforce make it more resilient to economic crises than other states.

The most recent of these economic crises was the COVID-19 pandemic and the resulting recession. Though brief – officially lasting for just the two months of March and April 2020 – this recession caused many shocks to the economy, and various industries were directly impacted by public health precautions and policies, includ-

In Maryland, population growth began noticeably slowing a few years before economic growth stagnated. Year-over-year population growth fell from 0.8% in 2014 to -0.1% in 2022. Over the same period, U.S. population growth also slowed, but not by as much as in Maryland.

An examination of real GDP per capita (GDP divided by the population) reveals that lower population growth explains little of Maryland’s economic slowdown relative to the nation. Maryland’s real GDP per capita has grown 2.1% since the fourth quarter of 2016, compared to 11.9% for the U.S.

Like the GDP slowdown, Maryland’s employment (measured by the number of jobs in the state) and wage growth also stalled beginning in 2017. Employment then fell dramatically in the early stages of the pandemic, decreasing by 14.1% from February to April 2020, and has been slow to recover. As of the second quarter of 2023, employment in Maryland remains 1.3% below its pre-pandemic peak, and it is only 1.0% higher than it was in the fourth quarter of 2016. This slow employment growth is attributed to a lack of private sector job growth in Maryland. In the postpandemic recovery, federal employment in Maryland has grown considerably while private sector employment has not recovered to its pre-pandemic peak.

The lack of a full recovery in Maryland’s employment to pre-pandemic levels stems from a decline in the labor participation rate

“Maryland’s economy is anchored by diverse, world-class employers and institutions that contribute to and support the vibrant communities where they are planted.”

ing education, health care, and hospitality. While the pandemic is no longer a direct economic hindrance, economists are still working to understand the new business cycle and economic trends that have emerged in the pandemic recovery, including whether recent changes will fade or last.

Despite the aforementioned advantages, Maryland’s economic growth effectively stalled in 2017 and, outside of the pandemic, has been stagnant ever since. ... From between the fourth quarter of 2016 to the first quarter of 2023, Maryland’s Gross Domestic Product (GDP), or the value of goods and services produced in the state, has grown 1.6%, compared with 13.9% for the entire U.S. during the same period. When examining Personal Income (PI), which measures income earned by or spent on behalf of residents of a geographic area, Maryland also lags behind the nation and neighboring states.

(LPR) combined with a historically low unemployment rate, indicating that demand among employers for labor is high, but labor supply is scarce.

In Maryland, there are 3.1 job openings for every 1 job seeker, compared to the U.S. as a whole where there are 1.3 openings for every job seeker. The LPR is the percentage of the population either working (employed) or actively looking for work (unemployed). People choosing not to participate in the labor force are unable or unwilling to work at current wages offered.

Unlike other economic indicators, LPR in Maryland was rising faster than the national rate before the pandemic. During the pandemic, Maryland’s LPR fell from 69.3% in January 2020 to 65.6% by June 2020. As of the second quarter of 2023, Maryland’s LPR was 65.2%, more than 4 percentage points below the pre-pandemic level.

CONTINUED ON PAGE 16

NEWS & VIEWS

While Maryland’s current LPR remains higher than the national rate of 62.7%, which is the same as the national LPR from early 2020, the gap has shrunk due to the larger decline and slower recovery in the state. At the same time, Maryland’s unemployment rate is a historically low 1.7%, after having spiked to 9% in the beginning of the pandemic, in April 2020.

Examining labor participation by demographic groups shows that Maryland’s underperformance in LPR recovery relative to the nation and its neighbors is concentrated in the 25 to 44 age cohorts. A decline in labor participation among prime-aged workers is particularly concerning because these workers are typically the most productive compared to other age groups. LPR has fallen for men and women, with women showing a disproportionate absence from the workforce in the wake of the pandemic. While labor participation of both men and women has fallen in Maryland, the decline among women has been relatively larger compared to the nation, most census regions, and most neighboring states. In Maryland, there has been a decline in male labor participation in both the 25-34 and 35-44 age groups since the Great Recession. For women, the decline is most pronounced in the 25-34 age group since the Great Recession and also more recently since the pandemic. There has been additional decline in the 16-24 age group since the pandemic.

Survey data indicate that household responsibilities such as childcare and health issues are contributing factors, especially for women opting to leave the traditional labor force. Additionally, research by the Brookings Institution and others has found the rise in opioid prescriptions has caused a startling decline in national labor participation for a period of time beginning prior to the pandemic.

There are structural issues (such as rising childcare costs and poor

health) causing declines in labor participation and preventing people who are out of the labor force from joining, or rejoining, the labor force. This evidence suggests that a tight labor market may not lead to significant improvements in labor participation.

Maryland’s population growth has been disproportionately impacted by two national trends: First, the rate of live births has failed to outpace the rate of deaths in the U.S. as the population has aged. Second, wealthier states located in the Northeast and West Coast with higher costs of living – most notably cost of housing –are generally growing more slowly, while lower cost of living states are experiencing faster growth. Maryland has experienced positive net-migration from more expensive jurisdictions like New York and Washington, D.C., but negative net-migration with lower cost states, like Pennsylvania and the Carolinas. Net migration overall declined during the pandemic, likely another contributor to the decline in the labor force.

The current trend in U.S. domestic migration is a reversal of historical norms. Maryland, as a wealthier state with higher average incomes, has traditionally drawn migrants from regions with lower productivity and incomes. Migration within Maryland shows a similar pattern, with people moving away from the Baltimore and Washington, D.C. metro areas, to counties on the Eastern Shore and in Western Maryland. The cost of housing appears to be the top driver of decisions on where people live, with remote work increasing options available to many members of the workforce. However, based on available data, it is not yet clear whether the remote work mobility trend will last.

Bill Sheridan, CAE, is editor of The Statement and chief communications officer for the Maryland Association of CPAs. CONTINUED FROM PAGE 15

Unlimited online access to 600+ CPE credit hours and 450+ courses on a variety of topics. Never miss a CPE deadline again.

Create and customize your personal online course catalog for quick access to professional research and learning. CPExpress is available 24/7 with courses that cover accounting, assurance, ethics, employee benefit plans, not-forprofit, fraud, forensics and more. macpa.org/cpexpress

NEWS & VIEWS

Sales tax on services: CPAs are safe this year, but what about 2025?

BY BILL SHERIDAN, CAE

Maryland’s business community turned out in March in united opposition to a bill that would have expanded the state’s tax base to include sales taxes on professional services, including those provided by CPAs.

The question on everyone’s mind is: What happens next?

House Bill 1515, titled “Sales and Use Tax — Rate Reduction and Services,” would have reduced the sales tax rate from 6% to 5% but extended the 5% sales tax to various everyday services that were previously untaxed, including accounting services.

Other never-before-taxed services that would be impacted include:

• child care services;

• legal and appraisal services;

• real estate services;

• shipping and delivery services;

• transportation, towing, parking and automotive services;

• home repair, cleaning and improvement services;

• dry cleaning and laundry services;

• salon and barber shop services;

• veterinary and pet grooming services; and

• advertising, printing and media streaming services.

The proposed bill was identical to a bill that the CPA profession and Maryland’s business community opposed and defeated in 2020

As in 2020, CPAs and other business-minded groups turned out en masse this spring to voice their opposition to the bill. Maryland’s House Ways and Means Committee heard testimony about the proposed bill on March 11, and MACPA members were among the many on hand in Annapolis to speak out against the plan.

CPAs’ objections to HB 1515 include the following:

• Complexity: Between remote work, the possibility of customers being located in multiple states, and companies with multiple offices and out-of-state staff, it is extremely difficult to source where the sale and delivery of professional services occurs. Complexity increases exponentially with multiple factors such as these.

• The burden on small businesses: Most small businesses use outside CPA and accounting services — everything from bookkeeping and financial statement preparation to tax preparation and more. A sales tax on such services would put smaller businesses at a competitive disadvantage against bigger Maryland businesses that have in-house accounting

NEWS & VIEWS

staff to handle those duties. Additionally, requiring small businesses to deal with multi-state taxation issues is an excessive burden.

• Additional compliance burden: All businesses will need to bear the additional costs of implementing a compliance structure on top of existing sales tax, income tax, and personal property tax processes.

• Paying a tax on tax: Taxpayers would be paying a tax on having their taxes prepared, which, to them, would feel like double taxation.

• Harm to Maryland’s business environment: No neighboring states tax professional services. In a geographically small state like Maryland, where most people live close to a neighboring state, this would increase our costs by 5% and put us at a competitive disadvantage with those other states. Additionally, the sales tax is designed to be a tax on consumption; when business-to-business services are taxed, it becomes a tax on production.

• Failure in other states: Five other states — Utah, Minnesota, Florida, Michigan, and Massachusetts — have adopted a sales tax on professional services only to later reverse it, largely due to compliance and enforcement difficulties.

Read our position paper in opposition to sales taxes on professional services.

WHAT HAPPENS NEXT?

The good news is that HB 1515 did not find the necessary support in Maryland’s General Assembly this year. Maryland Gov. Wes Moore has said he “doesn’t see the need to raises taxes” this year, and he backed up that notion by submitting a $63 billion budget that did not include any tax increases. That budget was ultimately approved, albeit with concessions from each side after a bout in committee negotiations.

Even lawmakers seeking solutions to the state’s looming budget shortfalls were reluctant to rush things. The bill’s sponsor, House Majority Leader David Moon (D-Montgomery County), said HB 1515 was meant as “a bit of a conversation starter” in anticipation of more serious future discussions of how Maryland might address its shortfalls. And Senate Budget and Taxation Committee Chair Guy Guzzone told Maryland Matters that the state’s rainy day cash reserves give lawmakers some time to explore all options.

“We do have, out into the future, some significant issues to deal

with,” Guzzone told Maryland Matters reporter Bryan Sears. “I know we’ll also figure out ways to deal with them in due time.”

WE NEED YOUR HELP

So again, the good news is that broad-based increases in the sales tax as proposed in HB 1515 were not included in the state’s budget this year.

The bad news is that although sales tax on services are off the table for 2024, it is all but certain that the General Assembly will consider it as part of a revenue package next year. Lawmakers still have some big shortfalls to make up, and they’ll be looking at any and all ways to raise that money.

We’ll undoubedly need your help next year. We’ll need you to stay vigilant. Follow our legislative updates in our Connect communities online and on our blog. We’ll keep you posted as developments warrant.

BECOME A LEGISLATIVE VOLUNTEER

Make plans to join the MACPA and your fellow CPAs at the 2025 edition of CPA Day in Annapolis next January. The annual event matches CPAs with their elected officials and allows you to discuss issues of importance directly with lawmakers. The MACPA will give you pointers on what to say and how to say it. All you need to do is show up with an eye on protecting the profession. Keep an eye on MACPA.org for details as the event draws closer.

Mark your calendars and save the date. Join us there in person. It will be more important that ever to turn out in force and make our voices heard.

SUPPORT OUR PAC

You can also support our legislative efforts significantly by donating to our political action committee. Issues like this are perfect examples of why supporting our PAC is more important than ever. Through contributions from members like you, our PAC is able to work toward favorable outcomes on legislative issues that affect CPAs, educate legislators about matters that are important to the CPA profession, and keep MACPA members informed.

Your generous contribution will help ensure Maryland CPAs have a voice in Annapolis and will help ensure a vibrant CPA profession in the future.

Learn more and donate today by visiting MACPA.org/advocacy.

BUSINESS AND INDUSTRY

Return-to-office mandates: Considerations for employers

Editor’s note: The following article originally appeared on March 8, 2024 on the Financial Management website. It is reprinted with permission.

BY STEPH BROWN

If employers want staff to return to the office, they need to consider what they’re willing to offer in return.

Flexibility is not something that workers are willing to give up, and enforcing return-to-office mandates could pose retention challenges for organizations.

Employer and employee expectations are divergent. Some employers want workers to return to the office, but employees are resistant to going back to pre-pandemic working patterns, according to survey results from international recruitment company Robert Walters.

Fifty-three percent of professionals would start looking for a new job if they were asked to work in the office more, in conflict with the expectations of 27% of employers who said they want staff to return to the

office more, a press release said. The findings are from a recent poll of 2,000 UK professionals and employers.

Nearly half (46%) of professionals cited associated costs as a key deterrent to spending more days in the office. Other wellbeing factors come into play, including disruption to work / life balance (28%); long commutes (16%); and too many distractions at work (10%).

If employers want workforces to return to the office, they need to focus on incentives, according to Chris Eldridge, CEO of Robert Walters UK, that demonstrate to employees “what can be gained from returning.”

Eldridge advised that incentives from companies should address how they plan to assist employees with the financial burdens of returning to the office; what additional training and mentorship opportunities getting back to the office would bring; and how they plan to have a more open, collaborative, and communicative culture.

The most common benefits of working in the office cited by employees were helping to keep and maintain a weekly routine (36%); brainstorming with colleagues (26%); having in-person meetings (24%); and getting more facetime with senior leaders (14%).

While more than one-quarter of employers want to see their employees in the office more, 73% of company leaders said they would not require a full return to the office yet, even if it wouldn’t affect retention.

“With inflation still high and ongoing concerns over the cost of living, spending money on the commute to work, buying lunch, amongst other expenses, presents yet another key obstacle for professionals returning to the office,” Eldridge said.

“Leaders attempting to jump the gun and implement a full return ... are quickly going to run into trouble — as it’s clear that many professionals won’t readily give up the flexible working routines that they’ve spent the last [three to four] years getting comfortable with.”

To comment on this article or to suggest an idea for another article, contact Steph Brown at Stephanie.Brown@aicpa-cima.com

June

Annual Meeting + Town Hall

MACPA Celebrate Reception

)

Step 1: Learn.

The AICPA offers several online self-study learning opportunities covering the CFF Content Specification Outline (CSO):

Exam Review Course (online)

CFF Exam Review Course (20 CPE)

– Comprehensive review of the fundamental dimensions of the CFF CSO to help prepare for the exam. Includes Forensic Accounting Essentials textbook with exam practice questions.

Education Resource

Essentials of Forensic Accounting, 2nd Edition (textbook available in paperback or e-Book)

Take your career to the next level by adding three simple letters: CFF

Certificate Programs (online)

Fundamentals of Forensic Accounting Certificate Program (21.5 CPE)

– Focuses on an introduction to financial forensics and foundational knowledge of the legal system, gathering information, discovery, reporting and providing expert testimony.

• Pathway to CFF Credential

– Core Forensic Accounting Certificate (16 CPE + CFF Exam Part 1)*

– Focuses on the areas essential to planning, performing and reporting for all forensic accounting engagements.

– Specialized Forensic Accounting Certificate (43 CPE + CFF Exam Part 2)*

– Focuses on the specialized forensic knowledge, tools and procedures during an engagement.

high. And growing!

*Completion of both Core and Specialized education + the 2-part CFF exam, yields 59 CPE credits and two certificates. Upon completion, candidates have satisfied the CFF application requirements. No additional hours are needed. Core and Specialized education may be taken for CPE Only.

Step 2: Pass the exam.

Candidates may take the exam in person at one of 300 locations nationwide or online in a remote, proctored environment. Exam assesses candidate’s knowledge of the CFF CSO which requires competency in the following areas:

Forensic Accounting Standards and Roles

• Laws, Courts, and Dispute Resolution Laws, Regulations, and Guidance

In 2018, 80% of those offering forensic accounting services expected their businesses to grow more than 10% in the next two to five years.

IbisWorld report 2018

Engagement Initiation and Planning

• Information Gathering and Preservation

Qualitative and Quantitative Forensic Analysis

Step 3: Gain experience.

In 2019, 62% of firms are seeing growth of clients in litigation support and 58% are seeing an increase in forensics and fraud.

Investigative Reporting and Communicating Findings

Accounting Today, Top 100 Firms, 2019

Fraud Risk Management Concepts and Procedures

• Litigation Services Concepts, Methodologies, and Procedures It tells your clients you:

A CFF Candidate must meet one of the following business experience requirements within the five-year period preceding the date of the CFF credential application:

1,000 hours of forensic accounting experience

In an evaluation of 16 of the top forensic accounting certifications, the CFF credential was perceived as the most valuable by a group of independent experts.

Source: Journal of Forensic and Investigative Accounting Volume 9: Issue 1, January–June, 2017

Step 4: Get credentialed.

Initial certification requirements:

Represent a 125-year-old established, trusted and regulated profession

Have had your expertise backed by the world’s largest member association representing the accounting profession — the AICPA

Are distinguished from other practicing forensic accountants based on the required training, experience, testing and education

Teach four accredited college courses covering at least 50% of the CFF Content Specification Outline.

Completed CFF application indicating fulfillment of all requirements, including education, experience and exam

Have access to a community of like-minded professionals and the latest tools, resources and learning opportunities — and more — to be successful

Are competent and confident in the subject matter and are committed to continued learning in forensic accounting

Have demonstrated your expertise in: Forensic Accounting Standards; Laws, Courts and Dispute Resolution; Engagement Planning; Information Gathering and Preservation; Forensic Analysis; Investigative Reporting and Communication; Fraud Risk Management; and Litigation Services.

The pathway to the credential

Certified in Financial Forensics

Step 1 Step 2

Step 3

Step 4

Learn. Pass the exam. Gain experience. Get credentialed.

Step 1: Learn.

The AICPA offers several online self-study learning opportunities covering the CFF Content Specification Outline (CSO):

Exam Review Course (online)

• CFF Exam Review Course (20 CPE)

– Comprehensive review of the fundamental dimensions of the CFF CSO to help prepare for the exam. Includes Forensic Accounting Essentials textbook with exam practice questions.

Education Resource

• Essentials of Forensic Accounting, 2nd Edition (textbook available in paperback or e-Book)

Certificate Programs (online)

• Fundamentals of Forensic Accounting Certificate Program (21.5 CPE)

– Focuses on an introduction to financial forensics and foundational knowledge of the legal system, gathering information, discovery, reporting and providing expert testimony.

Pathway to CFF Credential

– Core Forensic Accounting Certificate (16 CPE + CFF Exam Part 1)*

– Focuses on the areas essential to planning, performing and reporting for all forensic accounting engagements.

– Specialized Forensic Accounting Certificate (43 CPE + CFF Exam Part 2)*

*Completion of both Core and Specialized education + the 2-part CFF exam, yields 59 CPE credits and two certificates. Upon completion, candidates have satisfied the CFF application requirements. No additional hours are needed. Core and Specialized education may be taken for CPE Only.

Step 2: Pass the exam.

Candidates may take the exam in person at one of 300 locations nationwide or online in a remote, proctored environment. Exam assesses candidate’s knowledge of the CFF CSO which requires competency in the following areas:

• Forensic Accounting Standards and Roles Laws, Courts, and Dispute Resolution Laws, Regulations, and Guidance

• Engagement Initiation and Planning Information Gathering and Preservation Qualitative and Quantitative Forensic Analysis

Step 3: Gain experience.

• Investigative Reporting and Communicating Findings

Fraud Risk Management Concepts and Procedures

Litigation Services Concepts, Methodologies, and Procedures

A CFF Candidate must meet one of the following business experience requirements within the five-year period preceding the date of the CFF credential application:

1,000 hours of forensic accounting experience

Step 4: Get credentialed.

– Focuses on the specialized forensic knowledge, tools and procedures during an engagement. Initial certification requirements:

Teach four accredited college courses covering at least 50% of the CFF Content Specification Outline.

Completed CFF application indicating fulfillment of all requirements, including education, experience and exam

TAX CORNER

Werfel says digital initiatives can transform ‘iconically unpopular’ IRS

Editor’s note: The following article appeared originally on March 19, 2024 on the Journal of Accountancy website. It is reprinted here with permission.

FROM MARTHA WAGGONER

Danny Werfel understands that the IRS has a perception problem. The IRS commissioner said in a speech Monday at American University that the Service is “iconically unpopular,” even playing a clip from The Simpsons to illustrate the point.

But Werfel, whose speech included video of Homer Simpson booing the IRS, believes that a more digital IRS can improve its track record of long wait times, inefficient processing of returns and refunds, and other issues that Werfel admits are “a large mountain to climb.”

Werfel said that a digital transformation — courtesy of funding from the Inflation Reduction Act of 2022, P.L. 117-169 — can better serve those who need in-person help and better enforce the laws so that the wealthy pay what they owe.

“We’re building an IRS where all taxpayers can meet all their responsibilities, including all interactions with the IRS from questions to payments to resolutions in a completely digital manner if they choose,” Werfel said. “We’re catalyzing this transformation because a digital-first IRS is a generational imperative. It’s how most taxpayers want to interact with us in the 21st century.”

More online interactions release IRS employees from manual duties and let them concentrate on taxpayers who need in-person help at Taxpayer Assistance Centers or at pop-up offices that the IRS sets up in rural areas, he said. It also lets the IRS concentrate on the big issues, such as working with taxpayers whose identities have been stolen, which the national taxpayer advocate listed as a major problem in her annual report to Congress earlier this year, he said.

“We have to make it that if you are unfortunately a victim of identity theft that you can get a fast resolution from the IRS and get everything sorted quickly,” he said. “That’s when I say that a fully digital IRS unlocks our full potential.”

He outlined how the IRS has focused enforcement on highincome groups by serving notices to 125,000 people who have

not filed a federal income tax return since 2017, including 25,000 with incomes over $1 million; conducting audits focused on the use of corporate jets; and collecting $520 million since mid-2023 in taxes owed by millionaires.

Still, he does not expect cheers from American taxpayers.

“I showed the video of Homer booing us because … I recognize that we are iconically unpopular across America,” Werfel said, also comparing the IRS to sports referees.

“But without the referee, there’s no game. It’s chaos,” he said. “At the end of the Super Bowl, no one’s planning a parade for the referees. And that’s OK.”

To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpacima.com

UPCOMING EVENTS

May 14, 2024 • In-Person

Best and brightest emerging Accounting and finance professionals learning the skills to, advance their careers

May 20, 2024 • In-Person & Online

Understand The Evolving Trends in Business & Industry

June 7, 2024 • Online

Shape the CPA profession by shaping future CPAs

June 13, 2024 • In-Person

Tee off for a cause that counts

June 17-19, 2024 • In-Person

Come for the Learning: Stay for a vacation

PUBLIC PRACTICE

The evolving role of project management in CPA firms

BY AMANDA WILKIE

The professionals in accounting firms are no strangers to engagement management—setting up timelines for client deliverables, effectively managing client expectations, and ensuring they never miss a deadline.

Now, more firms are recognizing the importance of project management in driving efficiency and success. But what is project management? How does it differ from engagement management? And what project management tools should firms use to track projects and hold team members accountable?

DEFINING PROJECT MANAGEMENT IN AN ACCOUNTING FIRM

The Project Management Institute defines a project as “a series of structured tasks, activities, and deliverables that are carefully executed to achieve a desired outcome.”

Firms might refer to managing client engagements as project management, but engagement management is primarily clientfocused and revolves around routinely delivering client services. While different engagements might have unique aspects, they usually have a common deliverable: a tax return, a financial statement, a strategic plan, etc.

Project management encompasses a broader scope and projects with a clear beginning and end. They’re not part of the firm’s routine operations and might include people who don’t usually work together.

THE

ROLE OF PROJECT MANAGEMENT

The complexity and scale of operations in modern firms have led to the creation of special roles for managing diverse projects. Firms are increasingly recognizing the need for dedicated project managers to handle initiatives such as:

• Implementing new HR tools

• Process improvements

• Technology upgrades

• Office relocations

• Mergers and acquisitions, and more.

SKILLS OF AN EFFECTIVE PROJECT MANAGER

Managing projects requires many of the same skills as managing client engagements. While they don’t need accounting experience, a proficient project manager needs:

• Organizational skills. Exceptional ability to plan, prioritize and manage resources.

• Communication. Clear and effective communication with stakeholders at all levels.

• Influence. Persuading and motivating team members and stakeholders to achieve project goals.

• Positive attitude. Proactive, enthusiastic, and motivated to manage stress and juggle multiple deadlines.

GROWING

PUBLIC PRACTICE

If you’re hiring a new project manager, it can be helpful to select your project management tool first and then look for a project manager who is familiar with that tool.

TOOLS FOR STANDARDIZING PROJECT MANAGEMENT

For decades, firms relied on email and spreadsheets to manage projects, but this is wildly outdated and inefficient today.

Many project management platforms exist to help firms keep track of projects, including Asana, Smart Sheets, and Monday.com. For firms using Microsoft 365, Microsoft Planner is an excellent starting point. It’s included in a Microsoft 365 subscription and integrates seamlessly with other Microsoft applications, providing a familiar environment for users.

No matter which tool a firm uses, it should facilitate:

• Transparency. Real-time visibility into project status and who is responsible for what.

• Tracking tasks and subtasks. Projects often have tasks and

subtasks, each with a start date, duration, and end date, which may be assigned to multiple team members.

• Issue identification. Quick identification of roadblocks and potential risks of the project getting off track.

• Deadline tracking. Monitoring progress to ensure timely completion.

• Support for remote and hybrid teams. Provide clarity on tasks and deliverables without face-to-face interaction between team members.

• Reporting. Modern tools can provide data to help create better estimates and timelines for future projects.

Integrating project management into your firm is a strategic move toward greater efficiency and effectiveness. By distinguishing it from engagement management and using the right tools and skills, firms can better support their internal operations and team members.

Amanda Wilkie is a consultant at Boomer Consulting, Inc.

Shape the CPA profession by shaping future CPAs

HIGH-TECH SOLUTIONS

Identifying and nurturing future IT leaders within your firm

BY MARC T. STAUT

Leadership development is a critical aspect of any successful CPA firm. And while many firms work to identify and nurture leaders from their service lines, it’s not uncommon to see them overlook this process for their IT teams.

As firms navigate digital transformation, the need for visionary IT leaders who can steer these advancements is essential. So, let’s consider how firm leaders can cultivate a diverse and innovative leadership team equipped to face future challenges.

EMBRACE DIVERSITY AND AVOID CONFIRMATION BIAS

The first step in identifying future IT leaders is to be mindful of confirmation bias when building your IT team and identifying those with leadership potential.

Confirmation bias happens when we favor individuals who mirror our own behaviors and attitudes. This approach can stifle innovation and diversity within your team. To build a balanced team, valuing different perspectives and backgrounds is essential. Diversity in thought and experience fosters creativity and drives innovation,

enabling your firm to adapt and thrive in a changing environment.

Geoff Smart and Randy Street’s book, Who: The A Method for Hiring, can be helpful in this context. It emphasizes the importance of finding the “rare find,” individuals who may not have been in the ideal situation previously but possess the potential to excel in the right role. It also provides guidance for identifying and placing the right people in the right seats—a crucial step in building a robust IT leadership team.

DEFINE ROLES—NOT JUST JOB DESCRIPTIONS

Clarity in roles and responsibilities is crucial for the success of any team. Move beyond job descriptions to define the specific roles within your team to provide clear direction and foster accountability. Each member should understand their unique contribution to the firm’s goals.

Keith Ferrazzi’s book, Leading Without Authority, offers insights into building teams that transcend traditional organizational structures. It highlights the importance of collabo-

ration across different departments, such as HR, project management, and marketing, to achieve common objectives. This approach encourages thinking outside the box and leveraging diverse skill sets within your firm.

DELEGATE AUTHORITY APPROPRIATELY Delegating the right amount of authority is crucial for empowering potential leaders. Holding individuals accountable for outcomes without giving them the necessary authority can lead to frustration and hinder progress.

Ensure your future IT leaders have the autonomy to make decisions and take actions that align with their roles and responsibilities.

INVEST IN TRAINING AND PROFESSIONAL DEVELOPMENT

The IT landscape is constantly changing, with new technologies, processes and best practices emerging rapidly. Providing your team with the necessary training and tools is essential for their growth and the firm’s advancement.

However, training IT professionals can be challenging. Many IT professionals are

HIGH-TECH SOLUTIONS

“To build a balanced team, valuing different perspectives and backgrounds is essential. Diversity in thought and experience fosters creativity and drives innovation, enabling your firm to adapt and thrive in a changing environment. ”

already experienced and well-trained, so it can be tricky (and expensive) to find specialized learning and development opportunities to help them grow in their field.

Peer communities can be a valuable resource for learning and development for IT professionals to share knowledge, develop soft skills and tackle complex challenges. These communities provide a supportive environment for growth, complementing traditional training methods.

MAKING TIME FOR LEARNING

It’s essential to recognize that professional development cannot be relegated to “spare time,” a resource few IT professionals have. If you invest in self-directed training resources without allocating time for your IT team to focus on them, it’s often wasted money.

Instead, allocate dedicated time for learning and development. This can be designating an hour a week or holding “Innovation

Fridays” for your IT team to focus on education and development. Whatever form it takes, setting time aside ensures that your team members can enhance their skills without worrying that they’re neglecting their workload.

Identifying and cultivating future IT leaders is a process that requires intention and investment. As a result, some firm leaders hesitate to invest, concerned they will invest in people only to have them leave for another opportunity. But perhaps the better question is, “What if you don’t train them and they stay?”

Only by investing in your team can you foster a generation of leaders equipped to drive your firm forward.

Marc T. Stout is a shareholder and chief innovation and information officer at Boomer Consulting, Inc.

FINANCIAL PLANNING

Health Savings Accounts: A ‘hidden gem’ of financial planning

FROM CHRIS BENSON, CPA, PFS

Health Savings Accounts (HSAs) are a hidden gem that more people should use to help save for retirement. These accounts are “triple tax-advantaged” because contributions are taxdeductible, earnings grow tax-free, and distributions are tax-free as long as they are used for qualified medical expenses. We have many clients who utilize HSAs, and I personally fund my own each year. I recently attended an excellent presentation on HSA planning opportunities by Kelley Long, CPA/PFS at the the National Tax Conference in Washington, DC. She offered some of the following tips on how to get the most out of these accounts.

ELIGIBILITY

You need to be enrolled in a high-deductible health care plan (HDHP) to be eligible to make HSA contributions. For 2024, a high-deductible health care plan is defined as one in which the annual deductible is not less than $1,600 for self-only coverage or $3,200 for family coverage.

Planning tip: If you are already enrolled in Medicare, you can no longer contribute to an HSA. If you enroll in Medicare during the year, you might be eligible for a partial HSA contribution. You must be extremely careful contributing around your enrollment date, as Medicare also has a six-month lookback period.

CONTRIBUTIONS

The maximum contributions for 2024 are $4,150 for self-only coverage and $8,300 for family coverage. An additional $1,000 catch-up is available for individuals over 55. The deadline to contribute is the due date of your tax return, so you have until April 15th, 2025 to make a contribution for the 2024 tax year.

Planning tip: The $1,000 catch-up for those over 55 can apply to both spouses, but the second spouse would have to set up their own HSA to make the $1,000 catch-up contribution.

INVESTMENTS

Many people set up an HSA and contribute each year, but instead of investing the funds, they just leave them in cash. If you really want to maximize the benefit of an HSA, you want to set it up with a provider who offers the ability to invest your funds.

Planning tip: Many HSA providers offer an investment account within your HSA. Morningstar reviews the best HSA providers each year, and you can find them here. I have my account with Lively, which connects directly with Schwab, where the rest of my investment accounts are held.

EXPENSES

Qualified medical expenses are expenses that would generally qualify for the medical and dental expense deduction. These are explained in IRS Publication 502, starting on Page 5

Planning tip: Some HSA provider apps (including Lively) will even have a built-in scanner to identify the eligibility of products. Some commonly missed eligible expenses include:

• Medicare and COBRA premiums.

• Over-the-counter products.

• Expenses of ANY tax dependent.

• LTC insurance premiums and actual LTC expenses.

REIMBURSEMENT TIMING

You can use the HSA to reimburse any qualified medical expenses incurred from the time the first dollar is contributed to the plan; there is no time limit. If you keep a good record of your qualified

FINANCIAL PLANNING

medical expenses, you can allow the HSA to grow over many years and then take tax-free distributions in the future.

Planning tip: Keep ongoing records and receipts for every medical expense incurred over the years. Many different apps out there will help you scan and organize your receipts but remember you are responsible for keeping these records for the IRS. Your HSA provider might even have one built into their app, as Lively does

CONTRIBUTIONS FOR ADULT CHILDREN

If you have a child aged 19-26 who is carried on your HDHP but is no longer your tax dependent, they can open an HSA in their own name and fund the account up to the family limit, which is $8,300 for 2024. They can take a tax deduction for this contribution, even if the parents gift funds for the account.

Planning tip: Sometimes referred to as a “Super HSA,” some families can contribute more than the family limit to HSA accounts in any given year. If you have a 23-year-old and a 25-year-old who are still on your HDHP and are not tax dependents, you could contribute up to $24,900 ($8,300 x 3) to HSAs for 2024.

END-OF-LIFE PLANNING

HSA accounts pass outside of probate, so it’s important to make sure you have the appropriate beneficiaries listed on your account. If your spouse is the beneficiary, they can maintain the tax-free status, but if the beneficiary is a non-spouse, it becomes an imme-

diate taxable distribution. Your heirs would have up to one year to reimburse any eligible expenses you incurred before you passed from the HSA.

Planning tip: Due to the immediate taxable event for non-spouse beneficiaries, an HSA might be a good option to fulfill charitable bequests after your death.

As you can see, there are a lot of complicating factors to consider when it comes to health savings accounts, and this article only scratches the surface. If you would like to learn more about Health Savings Accounts, consider signing up for the MACPA Personal Financial Planning Conference on November 12th. We will have HSA expert Kelley Long joining us to talk about these planning tips and more.

Chris Benson, CPA / PFS, is a principal who leads the financial planning practice at L.K. Benson & Company in Towson.

The views expressed represent the opinions of L.K. Benson & Company and are subject to change. These views are not intended as a forecast, a guarantee of future results, investment recommendation, or an offer to buy or sell any securities. The information provided is of a general nature and should not be construed as investment advice or to provide any investment, tax, financial or legal advice or service to any person. Please see additional disclosures for more information

FROM OUR PARTNERS

Prevent accountant burnout: 3 ways to put people first

BY MARY ELIZABETH HAMMOND

Staff shortages and employee burnout are becoming all too commonplace in the accounting industry. Recent data from The Wall Street Journal reveals a staggering 17% decline in employed accountants and auditors in the United States over the past two years. This causes a vicious cycle: As fewer professionals enter the workforce and others leave due to burnout and retirement, more pressure is placed on existing staff—further leading to low job satisfaction and accountant burnout.

Fortunately, there are strategies you can employ to combat these ongoing challenges. Our recommendation? Put people first. In this article, we’ll cover:

• The burnout rate for accountants.

• The leading causes of burnout and departure for accountants.

• What a people-first approach is, and how to embrace it.

• Three ways to utilize technology to put people first.

WHAT IS THE BURNOUT RATE FOR ACCOUNTANTS?

What exactly does burnout entail? The American Psychological Association defines burnout as “a state of emotional, physical, and mental exhaustion resulting from prolonged and excessive stress.”

Symptoms of burnout include constant exhaustion, changes in personal and professional relationships, trouble concentrating, and often self-medication, in extreme cases, even substance abuse. Ultimately, burnout not only causes the employee to suffer but their work as well.

This sort of exhaustion is evident in accounting, particularly during the busy season. A FloQast survey of approximately 200 accounting and finance professionals found that 99% of surveyed accountants report feeling burned out. Of that, 24% reported medium to high levels of burnout. Below, we’ll discuss what may be causing this.

WHY ARE SO MANY ACCOUNTANTS BURNED OUT AND QUITTING?

1. Staffing shortage

As the previously mentioned Wall Street Journal data revealed, accountants are leaving the industry in the thousands. The U.S. Bureau of Labor Statistics projects this trend will not slow down. They project an annual vacancy of around 136,400 accounting and auditing jobs from 2021 to 2031. With so many leaving the industry, those staying are left to carry the load.

2. Long hours and a lack of work-life balance

The accounting profession is known for revolving around “the busy season,” or tax season. At certain points of the year, it’s not uncommon for a public accountant to work 60 to 80 hours a week. These demanding seasons leave very little time for a personal life and make a healthy work-life balance nearly impossible.

3. Slow technology adoption

The accounting industry has a reputation for being traditional, slow to adapt to changes, and hesitant to embrace new technology. As a result, accounting professionals can easily be buried in both client work and operational work, such as billing and invoicing, managing payments, and reporting and reconciliation. Leveraging technology to automate repetitive work can help elevate the load put on accounting professionals, so they can focus on more impactful work.

4. High client expectations

High client expectations can also be a significant contributor to accounting burnout. Client expectations are on the rise in most

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industries—accounting is no exception. In fact, stress in the accounting industry may be even higher due to client expectations for their tax preparation, as they may fear getting flagged for an audit or not receiving sufficient funds.

With all of these demands, it’s understandable that accountants may feel bogged down and motivated to leave the profession for a less demanding situation. However, implementing a people-first approach as part of your business strategy can not only help prevent accounting burnout but also set your firm up for success in the long run and ready for what’s next.

TAKING A PEOPLE-FIRST APPROACH TO REDUCE ACCOUNTANT STRESS

A people-first approach to managing an accounting firm focuses on prioritizing the well-being of team members and clients above all else—which goes beyond superficial perks like free snacks and ping-pong tables.

With a people-first approach, the goal should be to cultivate a positive employee experience which, in turn, directly impacts the client experience. Essentially, happy employees are better able to produce high-quality work and optimal results for clients.

Additionally, adopting this strategy is instrumental in attracting and retaining top-tier talent. This is especially crucial amid an industry-wide staffing crisis.

THREE WAYS TO LEVERAGE ACCOUNTING TECHNOLOGY TO PUT PEOPLE FIRST

Accounting software empowers your firms to save time, which ultimately leads to less burnout, better client service, and increased profits. (In fact, you can see just how much time and money your firm could be saving with CPACharge in our efficiency calculator Below, we’ll discuss three tactics for leveraging this technology to ease the burden placed on your team.

1. Utilize automation

With automation, accounting professionals can easily reduce hours spent on time-consuming, repetitive work. For example, accounting software such as CPACharge allows you to speed up invoicing — whether you bill by the hour, choose a value-based pricing strategy, or pursue another pricing model.

Bonus: Take a deep dive into value-based pricing, its benefits, and how to implement it in your firm with this e-book

CPACharge also allows you to schedule out payments in advance for recurring transactions or work on retainer. This allows your team to focus on the needs of clients rather than spending precious time tracking hours and logging billable tasks.

“CPACharge has made it easy and inexpensive to accept credit card payments. Clients are able to pay their bills with no hassles, and I get confirmation of payment immediately, taking away the

burden of having to worry about the check being in the mail.”— David Cantor, CPA, Cantor Forensic Accounting

2. Enhance security measures

Better data security for accounting firms gives both employees and clients more peace of mind. With so much sensitive financial information passing through your firm, it is essential to employ top-tier security efforts.

CPACharge’s end-to-end payments and billing software for accountants is designed to help alleviate the burden of tight security by providing PCI Level 1 compliance (the highest level). Plus, CPACharge can also help your firm become and remain PCI compliant

“I love that I can send clients to my CPACharge payment page to input payment information themselves. I never have to personally input or authorize charges, so I can avoid any potential concerns of conflicts or misuse of client confidential information.”— Scott Saltzman, CPA, Saltsman LLC

Tip: Learn how to keep your firm’s sensitive information safe with our free e-book, “Cybersecurity: Best Practices for Accounting Firms.”

3. Simplify reporting and reconciliation

Technology can also be used to simplify time-consuming tasks such as reconciliation. With CPACharge, you can see complete transaction details and full daily deposits of client funds with no fees deducted until the beginning of the following month. In addition, CPACharge offers QuickBooks Online reconciliation, which means these transactions can automatically be uploaded to QuickBooks Online. This greatly reduces the time and accountant stress often required to achieve reconciliation.

CPACharge users also have access to a robust financial reporting dashboard that provides key business metrics, setting your firm up to better understand your revenue trends, project cash flow, and identify opportunities for business growth.

“As a bookkeeper who reconciles transactions from multiple sources, CPACharge is the most logical, user-friendly, and from an accounting standpoint, the most easily reconciled system I’ve experienced. Thanks for making my life and bank reconciliation much easier!”— Julianne Jay, Bookkeeper, Crippen CPA

PREVENT BURNOUT AND BOOST EFFICIENCY

As many fight to combat the accounting shortage and industrywide burnout challenges, CPACharge is committed to enabling accounting firms to put people first. In fact, our technology is trusted by over 150,000 professionals nationwide to automate operations, offer client-friendly payment options, get paid faster, and ultimately boost firm efficiency.

Reduce accountant burnout and give your team the tools they need to succeed with CPACharge. Book a demo today

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• Secure source document upload

• Tax return summary display

• Automated e-sign & payment reminders

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• Single dashboard for tracking and reporting

• Collect invoice payments

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Spend and expense management is a low-lift and approachable CAS area that offers immediate benefits for both your clients and your firm.

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CROSSINGS

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This month, Statement launches a new feature called Future Leader. As the name suggests, we’ll use this space in each issue to highlight a future accounting and finance leader in Maryland as they share their inspirations, challenges, opportunities, and lessons they’ve learned about leadership and our profession along the way.

FUTURE LEADER ROCKY ALIPING

CliftonLarsonAllen

Graduate, Bowie State University

What inspired you to study accounting?

Ultimately, my family inspired me to study accounting. In my large extended family, I have two aunts and two cousins who pursued accounting, whom I look up to. Unfortunately, it would have been more if it weren’t for the unjust barriers and personal situations that some have faced that were beyond their control. As a kid, I have always wanted to honor my loved ones’ struggles. So, I wanted to live in accordance with those who could not. Additionally, I took a few accounting classes in high school that sparked my interest in the field. I enjoyed the problem-solving aspect, in terms of varying situations, where there could be multiple solutions to a given problem.

During your education, what was your favorite accounting class and why?

My favorite accounting class was “Financial Accounting and Reporting,” which I initially took during the first semester of my freshman year in college. It was one of the two accounting classes I took for that semester, the other being “Conceptual Framework and Accounting Standards.” It stood out and influenced me the most because of the professor I had. Although I had failed the class on my first try, I gained so much more and it reassured my love for accounting.

Looking back, my professor creatively broke down key concepts so that we would be more likely to remember them. We completely finished the book by the end of that semester. She was actively practicing as a CPA while teaching at the same time. Her personalized style of teaching is what inspired most of that class to trudge on with accounting. To this day, the same peers I failed the class with have already graduated with their degrees in accounting, and some have even passed their respective licensures. Having her passed-down knowledge as my foundation luckily prepared me for the various educational challenges brought about by the recent global economic declines, which drastically affected the quality of education at that time. So I have her to thank for that.

Are there any mentors or resources that helped you along the way? Any teacher shoutouts?

My educational journey has not been the smoothest, although I’m blessed to have had countless people who helped me along the way, even through simple acts of kindness. I am thankful for all my professors -- especially Mrs. Bernadette Cope Mendoza from Saint Louis University and Dr. Satina Williams from Bowie State University -- for being such influential educators beyond what is expected. Additionally, prior to having the opportunities I have had today, it was NABA (the National Association of Black Accountants) and the MACPA that initially gave me insight into the accounting world I never even knew existed.

How do you see yourself contributing to the profession as you grow in your career?

As I grow in my career, I hope to pay forward the blessings I have received. I want to give not because I have much but because I know how it feels to have “nothing.” With the knowledge I accumulate in the future, I see myself helping in the field of education, but not necessarily as a professor.

What is the most important thing you have learned in the last five years?

In the last five years, I have learned that the most important thing for me is the value of sacrifice, which is needed in the long run. Short-term gratification isn’t necessarily bad, but constantly thinking of the bigger picture can create change for the better and beyond one’s own benefit. I firmly believe that I wouldn’t be here today as I am if it wasn’t for my family members who sacrificed throughout their lives having their loved ones in mind.

What has been the most challenging or impactful decision you’ve faced during your journey in accounting?

Through my limited time in accounting, the most impactful decision that I’ve made so far would be to stop making excuses and to start choosing to show up for myself. Doing my due diligence and not just making assumptions about certain things has helped me a lot.

What is the most important piece of advice you have been given?

For my parents and many of my family members, the accounting and corporate settings were vastly unknown. However, the one piece of advice that has stuck with me came from my mom. She mentioned, “In everything you do, choose to follow good leaders who represent your values and what you stand for.”

Have an idea for a future Student Spotlight? Contact MACPA Director of Member Engagement Lauren McDonough at 443-632-2328 or lauren@macpa.org.

For a str onger CPA pr ofession

We’re renewing our commitment to the future of the CPA profession.

Your donations support:

Pipeline

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MEMBER NOTES

Ryan Ebner named assurance partner at CohnReznick MACPA member Ryan Ebner, CPA, has been elected as assurance partner with CohnReznick LLP. Ebner is one of 24 newly elected partners who will bring expertise across advisory, assurance, and tax and play integral roles in the firm’s industry groups, driving CohnReznick’s world-class client service.

“CohnReznick’s ability to deliver world-class client service is driven by our commitment to recruit, develop, and reward outstanding individuals who demonstrate the capability to lead our firm into the future,” said firm CEO David Kessler.

“These 24 new partners, who comprise the largest new partner class in our history, are an exceptional group of professionals and team leaders who will be at the helm in serving our clients, developing and leading our people, and making a lasting impact on our communities for many years to come.”

In addition to Ebner, the new partners include:

• Ben Anderson – Tax

• Ben Beer – Assurance

Erin E. Clark, CPA, MBA, has been admitted as a member in the Hagerstown office of SEK, CPAs & Advisors.

• Avi Bobker Value 360 – Transactional Advisory

• Cody Bronson – Assurance

• Roman Castillo – Government & Public Sector

• Thomas Cimochowski – Tax

• Alexis Deutsch – Tax

• Staford François – Assurance

• Cindy Galamgam – National Tax – SALT

• Joe Green Value360 – Project Finance & Consulting

• Jason Hornung – Tax

• Dhar Kalsi Value360 – Valuation Advisory

• Aaron Kolko Value 360 – Transactional Advisory

• Anna Kostanian Value 360 – Transactional Advisory

• Jason Mintz – Assurance

• Brigid Morrissey – Tax

• Steve Munson Value360 – Valuation Advisory

• Patrick Olerich – Tax

• Anton Rayetskyy – Tax

• Nicole Stan – Assurance

• Vikas Thaker – Tax

• Jola Tuck – National Tax – Exempt Organization Tax Services

• Dan Wise – National Tax

Brianne Dickinson has been promoted to client relationship manager in the Hagerstown office of SEK, CPAs & Advisors.

Paul Previti, CPA, has been promoted to manager in the Hagerstown office of SEK, CPAs & Advisors.

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REPLIES TO ADS WITH FILE NUMBER: Email sponsorship@macpa.org, or reply via mail: To submit a classified ad, contact the MACPA at sponsorship@macpa.org or visit macpa.org/classifieds.

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WHY VOLUNTEER?

Impact

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Engagement

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