May/June 2018

M AY/J U N E 2 0 1 8

FUTURE THINK:

NEXT YEAR, NEXT DECADE AND BEYOND Page 4 PLANNING FOR THE FUTURE OF YOUR BUSINESS Page 7 PLANNING FOR YOUR CLIENTS’ FUTURES Page 8 PLANNING FOR YOUR FUTURE Page 8 PLANNING FOR THE FUTURE OF THE CPA PROFESSION

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Description RALPH ALBERT THOMAS, CGMA Chief Executive Officer & Executive Director rthomas@njcpa.org

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ELLEN C. McSHERRY, CGMA Chief Operating Officer emcsherry@njcpa.org DON MEYER Chief Marketing Officer dmeyer@njcpa.org

Rutgers Business School Master of Accountancy in Taxation RACHAEL BELL Managing Editor rbell@njcpa.org

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MAY/JUNE 2018 | NEW JERSEY CPA

contents M AY/J U N E 2 0 1 8

THE MAGAZINE OF THE NEW JERSEY SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS

4 Planning for the Future of Your Business RALPH RALPH ALBERT ALBERT THOMAS, THOMAS CGMA Chief Chief Executive Executive Officer Officer & Executive & Executive Director Director rthomas@njcpa.org rthomas@njcpa.org ELLENELLEN C. McSHERRY, C. McSHERRY CGMA Chief Chief Operating Operating Officer Officer emcsherry@njcpa.org emcsherry@njcpa.org DON DON MEYER MEYER Chief Chief Marketing Marketing Officer Officer dmeyer@njcpa.org dmeyer@njcpa.org RACHAEL RACHAEL BELL BELL Managing Managing Editor Editor rbell@njcpa.org rbell@njcpa.org KATHLEEN KATHLEEN HOFFELDER HOFFELDER Content Content Editor Editor khoffelder@njcpa.org khoffelder@njcpa.org MARC MARC L. L. REIN REIN Multimedia Multimedia Specialist Specialist mrein@njcpa.org mrein@njcpa.org

Some sole practitioners may be considering a merger or acquisition in the near future, while other mediumsize CPA firms expect to grow specific niche areas. Regardless of size, planning for the future can be complicated and involve a lot of thinking about succession planning; how to build a staff pipeline; when, or if, to merge; and how to survive when key partners retire.

7 Planning for Your Clients’ Futures

READ READ NEW NEW JERSEY JERSEY CPA CPA ONLINE ONLINE ATAT NJCPA.ORG/ NJCPA.ORG/ NEWJERSEYCPA NEWJERSEYCPA DEDESIGN/ DE S IGN/ SIGNP/RODUCTI P RODUC RODUCT T ON I ON / / A DVERTISING ADVERTISIN G THE THE YGS YGS GROUP GROUP 3650 3650 WEST WEST MARKET MARKET STREET STREET YORK, YORK, PAPA 17404 17404 Advertising Advertising Contact: Contact: LAURA LAURA GAENZLE GAENZLE ACCOUNT ACCOUNT EXECUTIVE EXECUTIVE 717-430-2351 717-430-2351 laura.gaenzle@theygsgroup.com laura.gaenzle@theygsgroup.com

Where do you want to be in 10 years and what’s the best way to get there?

Do you know what it takes to become partner or CFO? How do you leverage social media? It’s important to not forget your own future in the midst of your strategy planning for clients or your company. From studying the right way to pass the CPA Exam to landing the key job, accounting professionals need to plan for their own future.

8 Planning for the Future of the CPA Profession

Are your clients prepared for more growth? Do they have an exit strategy in place? Today’s accountants need to be consultant, advisor and strategic planner — all rolled into one. Staying one step ahead of your clients’ financial needs is not only good client relations, it’s required. Helping them realize their potential is par for the course.

2 CLOSE UP THE THE NEW NEW JERSEY JERSEY SOCIETY SOCIETY OFOF CERTIFIED CERTIFIED PUBLIC PUBLIC ACCOUNTANTS ACCOUNTANTS 425 425 EAGLE EAGLE ROCK ROCK AVENUE AVENUE SUITE SUITE 100, 100, ROSELAND ROSELAND NJNJ 07068 07068 973-226-4494 973-226-4494 | NJCPA.ORG | NJCPA.ORG #NJCPAMAG #NJCPAMAG

8 Planning for Your Future

What We Learned from the NJCPA Member Survey 10 ADVOCACY & LEGISLATIVE ISSUES

NJCPA Advocacy Initiatives 11 BECOMING A CPA

There are lots of opportunities for today’s CPAs — work in corporate accounting, set up shop for themselves, join the Big Four, or enjoy some combination of all of these. It’s time that formal education matched up with the needs of the profession and the skillsets that are needed today and in the coming decades.

Technological know-how, soft skills and advanced accounting and finance knowledge will be in high demand.

15 FINANCIAL PLANNING SERVICES

Finding Financial Planning Candidates Among Your Existing Tax Clients 16 FIRM & PRACTICE MANAGEMENT

Professional Liability Developments

How to Turn CPA into CP-Yay!

18 GOVERNMENTAL & NONPROFIT

12 BUSINESS ADVISORY SERVICES

The Annual Audit: Making a Case to Embrace It

HIPAA Compliance for Healthcare Clients

20 PROFESSIONAL DEVELOPMENT

14 CORPORATE ACCOUNTING

How to Manage People

How CPAs Can Deliver Value Via Non-Financial Reporting

22 TAX

On the Move: Change of Domicile

24 TECHNOLOGY & INFORMATION MANAGEMENT

Why CPAs Shouldn’t Fret About AI Right Now 28 NJCPA NEWS

yy 2018/19 Executive Committee and Board of Trustees yy NJCPA Forensic Group Changes Name yy NJCPA Awards $375,000 to Next Generation of CPAs yy NJCPA Forms Cannabis Interest Group 31 CLASSIFIEDS 32 MEMBER STORY

Scott Fitzgerald, CPA

CLOSE UP

What We Learned from the NJCPA Member Survey

BY KATHY KRAIS, NJCPA MARKETING DIRECTOR

The accounting profession and the professional organizations that serve CPAs are undergoing extraordinary changes, and many foresee that we won’t recognize the vast majority of CPA firms in five or 10 years. With many firms planning to transform their organizations into significantly different businesses in order to adapt and thrive amidst these changes, the professional associations that serve them are also evaluating how to meet the evolving needs of their members, now and into the future.

A few months ago, the NJCPA solicited feedback from Fellow and CPA Candidate members through an online survey that was complemented by phone calls to a random sampling of members. The survey asked a series of open-ended questions designed to gain insight on key challenges and opportunities for the profession, our members and the Society. Nearly 6 percent of members responded with thoughtful consideration, and we’d like to share four of the themes that came across the strongest.

KEEPING THE BUSINESS RUNNING yy Hiring Hiccups: Firms and companies alike struggle with hiring and retaining junior-level staff members (generally, in the two- to five-years’ experience range).

They’re hard to find and harder to keep.

Finding competent seasonal help of all levels was also frequently thrown into the mix. Smaller firms are the hardest hit with respect to staffing challenges, which is further compounded by the fact that partners are juggling client work alongside recruiting, interviewing and hiring tasks.

yy Wellness Check: Members cite an array of concerns impacting the growth and sustainability of their businesses.

Concerns about competition came across in many forms: going it alone; working with non-CPAs; and small business and consumer reliance on the internet as a source of knowledge and advice. These factors are impacting the frequency in which CPAs are being turned to for advice. Regardless of the source of competition, many members agree on one thing — public perception of the value of working with a CPA has diminished, and it’s hurting their livelihood.

FUTURE FOCUS yy Expanding Horizons: Members recognize that the profession is changing and they need to change with it — but knowing how to plan for and implement change is what’s really keeping them up at night. Technology is an important dynamic — not the backoffice stuff; rather, it’s artificial intelligence, cybersecurity and blockchain, to name a few. With technology advancements, the need to develop specialized services is becoming more and more critical. Firms recognize the need to invest more dollars in both the technology and the development of non-traditional, diversified services lines to stay competitive. But they question: How? At what cost? And will we be able to effectively market those services and develop enough business to make it all worth it?

yy

yy Learning Lifeline: Members view the NJCPA as the go-to resource for technical education and programming.

Members also told us that they want anytime, anywhere access to educational programs. Key factors include frequency, convenience, affordability and timely subject matter. They’re also looking for education that goes beyond the technical to cover a broader range of topics, at a deeper level — to address their concerns about technology, marketing, business development and more.

We have more insights on the survey that we’ll share with you in the months ahead. Many of the views expressed present exciting opportunities for the NJCPA to support you. And that’s what we’ll be working on next.

At the NJCPA, we believe that there has never been a more important time to consider how we’re doing and how we can do better. What can you do? Keep this dialogue alive. Does this jibe with what you’re experiencing? Visit njcpa.org/feedback and share your thoughts.

New Jersey CPA (ISSN 1534-6692) is published six times per year by the New Jersey Society of Certified Public Accountants, 425 Eagle Rock Avenue, Suite 100, Roseland, NJ 07068. Issue No. 67 Copyright © 2018 New Jersey Society of Certified Public Accountants. Annual membership dues include $9 for a one-year subscription to New Jersey CPA magazine. Members may not deduct subscription price from dues.

Periodicals postage paid at Roseland, NJ, and at additional mailing office. POSTMASTER: Send address changes to New Jersey CPA, 425 Eagle Rock Avenue, Suite 100, Roseland, NJ 07068-1723.

The materials and information contained within New Jersey CPA are offered as information only and not as practice, financial, accounting, legal or other professional advice. The opinions expressed herein are those of the authors and not necessarily those of the New Jersey Society of CPAs. Publication of an advertisement in New Jersey CPA does not constitute an endorsement of the product or service by the New Jersey Society of CPAs.

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PLANNING FOR THE FUTURE

By KATHLEEN HOFFELDER, NJCPA CONTENT EDITOR

When accounting professionals run the numbers on a business or a project, they really run them — double check, triple check and finally review with a partner or manager before engaging with clients.

That kind of diligence can be found in corporate accounting too as CFOs and finance directors routinely mull over cost-saving practices and how to make departments more vertical before finalizing budgets.

Spreadsheets, Excel, software packages, the cloud and data analytics are all par for the course when reviewing clients’ taxes or advising on streamlining businesses and clients’ profitability. Analytics are used routinely today in financial reporting and preparing taxes, auditing, strategic planning or consulting, and even risk management.

But, increasingly, CPAs at the partner level are called to run the numbers on their own department’s profitability or bring in new business. Preparing for the future of

their own firm can be far more daunting to CPAs than planning for those of their clients’. They are likely to be less aware of how to handle the retirement of partners, keep the CPA pipeline alive and advance themselves up the ladder compared to preparing tax returns and reviewing regulations. From making themselves more marketable to succession planning for the firm, CPAs today need to not only adapt to changes in the accounting profession but learn to thrive in spite of them.

Often it can be as simple as knowing what resources the firm currently has and figuring out where it wants to be headed in the coming years. How firms achieve that varies depending on how much emphasis each firm places on the task. Some sole practitioners may be considering a merger or acquisition in the near future, while other medium-size firms expect to grow specific niche areas. But regardless of size, they all need some plan for the future and steps to put in place for the next generation.

PLANNING FOR THE FUTURE OF YOUR BUSINESS

SUCCESSION PLANS

Whether accounting firms are contemplating how to handle succession transitions or build up their staff pipeline for the next year or next decade, partners and senior managers need to plan appropriately.

Robert Hopper, CPA, partner-in-charge of SAX’s manufacturing and distribution practice, notes that there are lots of moving parts that need to be considered when planning for the future of an accounting firm. To narrow the approach, he suggests looking at succession plans in small steps.

“My recommendation would be to plan

CONTRIBUTORS In order of appearance

ROBERT HOPPER, CPA Partner SAX

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MIKE WALSH CEO Tomorrow

MAY/JUNE 2018 | NEW JERSEY CPA

ALLAN KOLTIN, CPA, CGMA CEO Koltin Consulting Group, Inc.

EILEEN MONESSON Principal PRCounts, LLC

RACHAEL ANEVSKI, M.A.O.B, PHR, SHRM-CP Founder and CEO Matters of Management

GAIL ROSEN, CPA Shareholder Wilkin & Guttenplan, P.C.

DR. SEAN STEIN SMITH, CPA, CMA, CGMA, CFE Assistant Professor Lehman College

for what you want to achieve in five-year increments, and then evaluate and pivot direction where needed.”

That kind of planning takes away some of the unknowns — whether a firm decides to stay with current staff in mind, plans new hires or some combination. “In the end, the success of your business lies in how you build your firm. If you wish to stay independent and strong, it is vital that

SYLVIA ZOZULIA, CPA Director Citrin Cooperman

SALVATORE A. COLLEMI, CPA Partner Marks Paneth LLP

you develop a vision for success and an exceptional team behind you that will see that vision through,” says Hopper.

To others, like Mike Walsh, author and CEO of Tomorrow, an innovation research lab, succession planning works best when companies consider the work culture and how to adapt to change. Firm management, he says, needs to realize how to “embrace a culture of agility, responsiveness and

GUY MILLER, CPA Partner Citrin Cooperman

CARMINE D’AVINO, CPA Principal and Investment Advisor Withum Wealth Management

innovation.” Walsh notes, in general, that companies need to “move as quickly as their customers do.”

RETIRING PARTNERS Just the mere mention of a partner thinking about retirement can send shivers to everyone at a CPA firm — depending on how much business the person accounts for. As

BRIAN FITZ-GERALD, CPA Founder Akseshen LLC

CATHLEEN MCQUILLEN, DPS Associate Professor and Director of the Accounting Program Georgian Court University

NEW JERSEY CPA | MAY/JUNE 2018

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Allan Koltin, CPA, CGMA, CEO of Koltin Consulting Group, Inc., puts it, how a firm handles retirement at the partner level can determine whether clients stay with a firm when the partner retires or whether they choose to move on. The latter decision can be disastrous for a firm.

“The number-one reason succession planning fails at firms starts with the retiring partner,” says Koltin. “All we are asking for here is their help so we have a meaningful edge on the competition when they retire.” Often partners overstep their bounds, he adds. “If that partner died tomorrow, the client wouldn’t go out of business. They would find another CPA firm to do their work.”

CPA firm partners, after all, are well paid. “We need to remind our retiring partners that the reason we pay them deferred compensation (goodwill) is for the legacy they leave behind (in this case, the client base),” he says. As Koltin asks, “Why do we allow this to happen and then add insult to injury by paying these partners deferred compensation?”

Instead, he says, firms need to draw a hard line with retiring partners, and, at a minimum, add a penalty clause to the partnership agreement for poor behavior when a retiring partner doesn’t do their part to properly transition clients.

Instituting penalties for the possible theft of partnership talent is not a pleasant thought but is, unfortunately, a reality.

Koltin says too many partnership agreements are actually too vague when it comes to the non-solicit provisions. “Firms should have strict penalties for stealing talent (such as one times the departing employee’s compensation) and better identify what services a retired partner can and can’t provide to clients after they leave the firm.” He says agreements often do not reference potential clients as possible assets of the firm, and these could fall under the non-solicit provision.

Eileen Monesson, principal of PRCounts, LLC, also sees retiring partners as a challenge, but not one that is insurmountable.

She reminds accounting firms about the problems of having too much invested in one or two partners. To her, not enough planning goes into the retiring-partner problem. “I frequently hear managing partners express concern over the next generations of leaders. While I agree that it can be difficult

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to find someone who has the right mix of leadership, business development and technical skills, they do exist,” she says.

Succession planning, according to Hopper, should be a top priority, along with figuring out compensation programs. “We were one of the first firms to establish pre-funding for our deferred compensation arrangements to offset the future buy-out of partners and eliminate an economic strain on the future generations,” he says.

Developing the next tier of leaders is incredibly important, especially considering the number of senior partners who will be retiring soon and the amount of ownership that will be in transition as a result, notes the AICPA’s 2016 CPA Firm Succession Management Report. “Firms should begin now to support staff development through training and cultural changes to develop a pipeline of future firm leaders.”

MERGERS AND ACQUISITIONS Even when a merger is the last thing on management’s mind, it can often be the only solution to compete on a larger scale.

If a firm is not open to growing a particular niche area on its own, a merger can provide valuable resources at a more efficient price. Having established clients and operations for family services or estate planning, for example, can often put a firm in the best position to grow, compared to putting out resources to start from scratch.

Rachael Anevski, M.A.O.B, PHR, SHRM-CP, founder and CEO of Matters of Management, sees mergers and acquisitions (M&A) as a logical prescription for many accounting firms looking to expand not only by practice but location. She says firms “need to dig deep to find out where you need to allocate resources — such as whether the firm should continue to develop from within or put more emphasis on acquisition and perhaps mergers.” And when preparing for future consolidation, she reminds that firms need to make sure benefits span “more than just the here and now.” As Anevski says, firms need to globalize benefits “to incorporate geography and multi-generational workforces.”

Gail Rosen, CPA, shareholder at Wilkin & Guttenplan, P.C., recommends not over

thinking when it comes to M&A. “The most important thing I learned was the value of merging now versus waiting. For me, Wilkin & Guttenplan was interested in all that Gail Rosen, CPA, PC, had to offer, which was me, my staff and my client base.

Choosing to wait until a few years prior to retirement would have meant it was primarily my clients that I was selling.”

For others like Hopper, sometimes alternatives to M&A work just as well. “Our firm never wanted to be in the position where we needed to merge or acquire in order to continue to exist. By building our own internal foundation for success, we have remained on the other side of mergers and acquisitions, and they are actually strategic moves that make sense to fulfill our growth initiatives.”

STAFF PIPELINE Hiring the most appropriate staff is both a challenge and a bright spot for today’s accounting firms. But staffing becomes even more crucial when planning for the future. Management needs to evaluate staffing needs not just during busy season.

Keeping the pipeline of CPAs going strong is a challenge for all size accounting firms, from the sole practitioner who needs to rethink the next couple of years to the mid-size firm that is planning to break into a new geographic region well into the next decade.

Anevski notes that in selecting the best candidates, “a best practice is to do a skills assessment for both current and future needs. From there you can draft your openings and future options based on promotion and retention rates.”

Retaining staff is key to remaining competitive and growing a firm. As Dr. Sean Stein Smith, DBA, CPA, CMA, CGMA, CFE, assistant professor at Lehman College, explains, “firms and partners must continuously invest in both education and technology to remain competitive and attract millennial talent.” The hard part, he says, is replacing the collective knowledge of the profession, setting up a succession planning methodology that makes sense for the firm or organization, and dealing with cross-generational workflow problems that can represent potential issues.

And keeping millennials, in particular, interested in accounting is important. As

Stein Smith notes, just to attract millennial talent, CPA firms need to remain current with modern technology and offer good benefits and education. “As millennials occupy a larger and more modern role in the profession, engaging in tactics and operations appealing to this demographic group should be a part of the succession planning process.”

PLANNING FOR YOUR CLIENTS’ FUTURES It is perhaps more common to think about one’s clients’ future than one’s own firm’s future, but taking both succession plans into account is the key to longevity in this profession. Many clients have family relations to consider, diverse revenue streams or challenges in expanding by region or internationally. Today’s accountants, therefore, need to be consultant, advisor and strategic planner — all rolled into one. They need to stay on top of the day-to-day tax, auditing or accounting

needs for their clients and also help them figure out how they will maintain current operations and expand.

As Sylvia Zozulia, CPA, director at Citrin Cooperman, explains, “today’s clients are seeking guidance to improve business operations, develop strategic plans, and evaluate industry trends and their potential effect on their business.”

Her firm expects its CPAs to focus on understanding clients’ businesses and the industries in which they operate, else they are not meeting their clients’ needs.

And that’s not a simple task. Clients, sometimes, are not the easiest to deal with, nor are they prepared for the next few years, let alone retirement or beyond.

According to the 2016 PCPS Succession Survey, a joint project between AICPA’s Private Companies Practice Section (PCPS) and Succession Institute, showed that “comparable to the last survey, less than half of all firms have succession plans in place, although over 80 percent of the firms expect succession planning challenges in the next five years.” The survey also noted that among many of the firms that

do have plans in place, critical issues are not being addressed.

Staying ahead of clients’ succession plans can be difficult. As Hopper notes, clients have to at least be open to the concept of succession planning before they start to plan. “One overall approach that we take with our clients is to get them in the mindset of ‘always ready and prepared to sell their business.’” He asks, “Why do we do that? Think about it, when you finally make the decision to sell your home, what do you do? You compile a list of items to fix or replace that you should have done while you owned the home. This is the same for a business.”

EXIT STRATEGIES Even if clients are far from retiring, they should have an exit strategy in place for when they want to move on, sell the business or combine with another business when they leave. An exit strategy, according to Hopper, should be a “work in progress and never static depending on the status of the company and the

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ever-changing goals of leadership.” The plans, he says, should be structured sooner, however, compared to waiting longer in order to secure the “intended future of the company.”

So, how often should this evaluation take place? According to Hopper, exit strategies should be evaluated on a yearly basis.

Owners need to consider, for example, if other family members or leaders can run the business or if there is enough financial wealth that the business can be transferred to others.

PLANNING FOR YOUR FUTURE Accepting a job in accounting is only half the battle in becoming an accounting professional. Today’s executives, whether CPAs or CPAs in training, need to be aware of their responsibilities within their firms at every level, client relationships and how to hold onto them, as well as how to market themselves to truly be successful.

As Salvatore A. Collemi, CPA, partnerin-charge of the professional standards group at Marks Paneth LLP, says, planning for your own future in this industry can be challenging but well worth it.

Seasoned auditors and accountants, he says, need to learn, “how to get a client and how to retain one.” Along with this is “how to network, meet influential people in the industry as well as potential clients and referral sources. We have to move away from the stereotype of being just a ‘number cruncher.’”

Moving up the corporate ladder can be complicated if a new auditor or accountant does not understand CPA firm dynamics. Sole practitioners will have a different set of criteria for the “path to partnership” than a mid-sized company or the Big Four. Young professionals as well as more mature ones need to understand how to “sell their brand” in the firm in whatever position they are in and hope to aspire to. To Collemi, it’s easiest to move up the corporate ladder if professionals not only make themselves marketable but understand exactly what their responsibilities are, what the quality control and risk management issues of the firm are and what standards the firm has laid out for its employees.

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Younger auditors and accountants, to him, should always have their “elevator pitch” ready to sell themselves when they meet other colleagues and more senior executives, whether inside the office or out. “They need to develop their executive presence as well as the ability to influence people. How would someone describe them in three words?” he explains.

Marketing oneself can be extremely helpful, but to Guy P. Miller, CPA, partner at Citrin Cooperman, getting started on the right path to partnership means actually going back to the beginning and taking the CPA Exam. Many accounting students want to take a break after they get their bachelor’s degree, he says, but if their goal is to be a CPA, they need to take the exam as quickly as possible after graduation. “Delaying will only cause you to lose that studying momentum you developed as a student, and — the longer you delay — your desire to get back into that mindframe will start to wane.”

“Although it won’t seem that way at the time, you will never be less busy in your career than you are after graduating; work responsibilities are at their lowest and, in most cases, so are your family responsibilities. Take a review class and dedicate a few months of nights and weekends to get it done — it will be worth it,” he says.

“There are many entry-level accountants who go on to work in accounting departments, or, in some cases as controllers, but they don’t take the time to get their credentials and become a pivotal player. It’s that last bit of effort and drive that will set you apart from the rest of the entry-level accountants and get you further ahead in your career,” adds Miller.

So what’s the best way to start planning for one’s future? At the beginning. In order to sit for the CPA Exam in New Jersey, an applicant has to first have a bachelor’s degree with at least 24 hours in accounting and 24 hours in business. To ultimately obtain a CPA license, he or she needs a total of 150 semester hours from an accredited school and have one year of experience working under a CPA. At the other end of the spectrum, Carmine D’Avino, CPA, principal and investment advisor at Withum Wealth Management, explains that for mature accounting professionals, planning for

retirement should be a top priority. As he notes, “any plan is better than no plan at all, and putting off or ignoring how you’ll fund the golden years could be the worst option.

Saving for retirement should be a fixture in your budget and not easily dismissed in favor of other demands or wants.”

Taking part in an employer’s retirement plan, D’Avino adds, is crucial, and if there is a match to one’s contribution, it’s best to aim to contribute at least the amount eligible for the match. And if an employer does not offer a plan, there are several different types of individual retirement accounts to choose from. He believes accountants should also “consider a series of possible outcomes and use a range of estimates for the variables that will impact your retirement plan.”

Spending, volatility of investment returns, taxes and inflation are all factors that will impact how well your goals are funded, he adds. “Even if you knew how long you would live and how much you would spend, it still would be extremely difficult, if not impossible, to estimate.”

PLANNING FOR THE FUTURE OF THE CPA PROFESSION Where is the profession going? Onward and upward, according to accounting organizations, firms and corporations alike.

But, only if it collectively adapts to change — both technological and by skillset.

And what better way to adapt to new ways of performing accounting tasks than by becoming adept at new forms of technology or online ledgers, such as blockchain. As Stein Smith acknowledges, blockchain, along with artificial intelligence and other technical tools, need to be incorporated into higher-level courses.

“While this will clearly be a process, and not a one-time event, being proactive and getting started are the best ways to incorporate these topics over time,” he says.

Brian Fitz-Gerald, CPA, founder of Akseshen LLC, adds, “college curriculums should include a knowledge of computer programming across several languages, such as SQL and Python, and familiarity with business intelligence tools, such as the

Microsoft Power BI suite.” To Fitz-Gerald, studying a wide breadth of technology, including online learning tools, enables an accountant to pick the most efficient tool to accomplish a task or analysis. “When you save yourself hours of work, you naturally build excitement and get hooked on learning to do more with programming,” he says.

As Zozulia notes, “in a technology-driven world, CPAs are in a position to develop their skillset by adopting an industry-specific focus. While traditional responsibilities, such as tax return preparation and compilation of financial statements, will always exist, a CPA needs to be ready to serve as an advisor with a specialized proficiency within their clients’ industry.”

While demographics may prove to be a boon for young accounting graduates with Baby Boomers coming into retirement and needing professionals to replace them, other factors could prove more challenging for the future of the profession. According to Accounting Today’s June 2017 article, “Your Future in the Accounting Profession,” automation and offshoring are big factors of change that will affect accountants. It explains that “cloud computing and other technologies will lead to greater automation of transactional data and compliance reports. It already has led to major cuts in accounting jobs.”

“You will not be working in repetitive data processing. Instead, the accounting profession will become more and more a consulting profession. All of us will become advisory experts, using our professional judgment to help clients make better decisions,” the article explains.

To take on a more advisory capacity when they eventually get into the profession, accounting students today need to have a better understanding of what it’s like to work in public accounting firms or the corporate world, says Anevski. She explains that college accounting programs need to be altered to include more entrepreneurial coursework, sales classes, business development coursework and human resources that will be needed in various accounting roles.

Stein Smith agrees. “Educators and academics must ensure that the CPA pipeline remains viable and valuable to the marketplace by keeping abreast of these many changes. Integrating techno-

logical and broader business trends into educational activities is the only way to ensure that graduates have both the skills and the mindset to thrive and lead in such a rapidly transitioning business environment,” he says.

Cathleen McQuillen, DPS, associate professor and director of Georgian Court University’s accounting program, says only by hitting the books and going back to class will accountants be prepared for significant changes in financial reporting, for example. “GAAP (generally accepted accounting principles) is adapting to the demands of a global business environment, including IFRS (international financial reporting standards), and changes routinely are reflected in accounting textbooks with a comparison of the former approach to the new method of GAAP reporting. These changes are explained in detail in the classroom.”

The classroom is also the best way to learn about new analytical approaches to accounting, she adds. “In classes which comprise accounting along with data analytics, new ways of doing accounting, taxes, auditing and business overall are studied including learning new software and webbased applications.”

But even the classroom environment is changing. As AICPA’s Horizons 2025 Report notes, “The internet and the growth of mobile technologies allow CPAs to engage in education whenever and wherever it is needed. Whereas in the past, CPAs often had to schedule classes in advance or order self-study manuals, today a CPA can identify a need and potentially immediately find a webcast, podcast or seminar available and participate without ever leaving his or her desk.”

Still, some of that learning is lacking when it comes to auditing, in particular. Many more college classes focus on financial reporting compared to auditing, notes Collemi. “Typically, only one or two semesters are spent on auditing compared to tax and accounting. Universities are creating future financial reporting consultants, not auditors. Students need to be taught how to apply critical judgment, professional skepticism, independence and ethics, and how to deal with ‘gray areas’ in auditing, strengthen their analytical skills and have a true understanding of the industries in which their clients operate in

and what an auditor’s responsibilities are in protecting the public interest,” he says.

Indeed, the technical side is not going away. While soft skills and learning to leverage social media are important, accounting knowledge must be supplemented by broader business knowledge encompassing finance, economics and technology, says the AICPA’s CPA Horizon’s 2025 report.

“Increasing globalization will require CPAs to obtain more knowledge about the international marketplace. CPAs will also need to stay up-to-date on changing regulations and standards.”

But the future looks positive. According to the Horizon report, “the entire profession — from sole practitioners to medium and large firm members to members in business and industry to those in government and academia — has a bright future and will need to respond quickly and competitively to the shifting ground on political, economic, social, technological and regulatory fronts.”

Resources yy CPA Firm Succession Management Report, AICPA, bit.ly/CPAFirmSuccessionManagement yy 2016 PCPS Succession Survey, bit.ly/CPAFirmoftheFuture yy “Your Future in the Accounting Profession,” AccountingToday, bit.ly/YourFutureinAccounting yy CPA Horizons 2025 Report, AICPA, bit.ly/CPAHorizon

LEARN MORE JUNE 12-15, ATLANTIC CITY NJCPA CONVENTION & EXPO Register at njcpa.org/convention READ MORE SUCCESSION PLANNING njcpa.org/topics/successionplaning CAREER RESOURCES njcpa.org/career/resources

NEW JERSEY CPA | MAY/JUNE 2018

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ADVOCACY & LEGISLATIVE ISSUES

NJCPA Advocacy Initiatives

BY JEFFREY KASZERMAN, NJCPA GOVERNMENT RELATIONS DIRECTOR

NJCPA CEO APPOINTED TO SENATE PRESIDENT’S ECONOMIC AND FISCAL POLICY WORKING GROUP New Jersey Senate President Stephen Sweeney appointed NJCPA CEO and Executive Director Ralph Albert Thomas to the New Jersey Economic and Fiscal Policy Review Working Group. This bipartisan panel, comprised of leading economists, tax experts, members of academia and lawmakers, has a broad mandate to investigate changes to government efficiency, fiscal policy, spending and taxation at all levels of government. The group will look at everything from how New Jersey funds local schools and other government services to what can be done to control high property taxes and stop residents from leaving the state for lower-tax states.

The working group grew out of concern over the new federal tax law that limits state and local tax deductibility starting in 2018. “We need to know how we can mitigate the negative impact of the federal tax plan and undertake a long-overdue examination of the adequacy, fairness and competitiveness of our tax structure,” Sweeney said. The group is chaired

by Senate Budget and Appropriations Chairman Paul Sarlo, Senator Steve Oroho and Assembly Majority Leader Lou Greenwald.

NJCPA SEEKS AMENDMENTS TO IMPROVE GENDER EQUALITY BILL The NJCPA and accounting profession are firmly committed to paying people equally for the same work, without discrimination, and based entirely on merit and performance. In fact, the accounting profession has been a leader in providing for the advancement of women. In a nationwide survey of female employees, four accounting firms were ranked among the top 20 “best places to work” for women. Three of the Big 4 accounting firms have female CEOs. Recently, legislation was introduced by Senator Loretta Weinberg (S104) address-

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ing the issue of gender equality. While the NJCPA strongly supports the intent of the bill, it has concerns about certain provisions that it is seeking to have amended.

Representatives of the NJCPA met with the senator to outline their concerns and propose amendments to address them.

These concerns are outlined below.

Statute of Limitations Period

S104 revises the New Jersey Law Against Discrimination to permit an employee subject to an unlawful employment practice to “obtain relief for back pay for the entire period of time in which the violation . . . has been continuous.” This provision could be read to allow employees unlimited back pay in a manner that undermines the applicable statute of limitations for claims alleging pay discrimination against employers.

No state has enacted a back-pay recovery period as long as the limitless period New Jersey’s S104 provides for. The maximum back-pay recovery period in other states is six years. Most states have a two-year period. Limitation periods are an important tool to protect employers from stale and unduly delayed claims. An unlimited window for back pay would place serious and uncertain liability on New Jersey employers.

Standard of Liability

S104 significantly shifts the burden of proof to the employer. Once any pay disparity is demonstrated, an employer must prove that no part of the pay difference was due to gender. It eliminates any consideration of whether an employee’s work was equal and whether they undergo similar work conditions or even work in the same geographic area.

Treble Damages

The bill awards treble damages for violations, which is inconsistent with federal and current New Jersey law for these types of violations. This is more punitive than most other states. It will encourage merit-

less litigation that many companies will be forced to settle rather than litigate simply because of the risk of extraordinarily high damages. Many businesses may choose to relocate or stay out of New Jersey.

Reporting Requirement

S104 would require any employer entering into a contract with a public body in New Jersey to disclose to the Commissioner of Labor and Workforce Development the gender, race, job title, occupational category and total compensation of every employee employed in connection with the contract. Reporting requirements of any type have been rejected in California and Massachusetts. California Governor Jerry Brown vetoed such a measure outright, citing the opportunity for plaintiffs’ attorneys to mine the data for strike suits.

The NJCPA is also concerned about individual privacy when salary data is disclosed to a public entity. This data will be made available to any employee of any state contractor.

READ MORE NJCPA LEGISLATIVE ACTION CENTER njcpa.org/advocacy

BECOMING A CPA

How to Turn CPA into CP-Yay!

BY JACK McCRACKEN, CPA, NISIVOCCIA LLP

I passed all four parts of the CPA exam on the first try with room to spare. I attribute this to smart study habits, hard work and a little bit of luck. Below, I will highlight some of the study habits and tricks that benefited me most on exam day. yy Decide in advance when you will study. The hardest part of every study session is simply sitting down and starting. There will be hundreds of things competing for your time and attention.

If you only study when you feel like it or happen to have time, nine times out of 10 you will choose not to study. Set yourself up for success by choosing ahead of time when you will study. yy Location, location, location.

Strategically picking a location to study has a huge impact on how productive your studying will be. It is important to study in a place associated with productivity and least likely to lead to distraction. During the week, I chose to study at my work office. On weekends, I alternated between my local library and a desk in my bedroom. Bottom line, find an atmosphere that works for you, and be consistent. yy Stay focused. On the topic of quality studying, limiting your distractions is crucial to studying well. Take away as many distractions as possible. Don’t allow yourself to text, look at social media or play any kind of game while you study. This is one of the most difficult parts of studying for the CPA exam.

Limit your distractions. yy Always pick quality over quantity.

A couple hours of quality, focused studying is worth more in the long term than several hours of distracted or tired studying. Some days you will be in the zone absorbing new material like a sponge. If the ball is rolling, don’t force it to stop. On the flipside, you are going to hit walls during your study time, but don’t be discouraged.

It’s unavoidable. When this happens, try taking a short break: Grab a snack, refill your coffee, take a short walk, or

if it’s late, consider going to bed so that you can be rested up for some more studying the next day. yy Set small goals with rewards. Even the most studious of CPA hopefuls are going to be frustrated at points. Concepts won’t click, you will get easy multiple-choice questions wrong, or maybe you’ll simply struggle to retain any new information. If you’re not careful, you might burn out. Set small goals such as making it through half of a chapter’s multiple-choice questions or simulations. Be creative with your rewards. It can be anything from letting yourself check Instagram to having some of your favorite candy. yy The final countdown. The last two weeks before your exam are critical.

At this point, you should be taking practice tests. These will include most, if not all, major concepts you are likely to see on exam day. These mock exams are difficult and designed to expose weaknesses. For this reason, don’t think of your results as an indication of how you will do on exam day. Rather, consider them guides for where to allocate some of your remaining study time.

In the last few days before the exam, I

would strongly recommend not trying to learn anything new. It is okay if you don’t know every detail. Use this time to review and reinforce what you have already covered. yy Judgment day. When exam day finally comes, relax. Be confident in the time and effort you put in leading up to this day. Could you have studied more?

Sure. But the past is in the past and, at this point, the best thing you can do is keep your mind fresh. Don’t do much more than glance over the major concepts and overarching themes. Walk into the exam room with your chin up. Oh, and don’t forget to bring your Notice to Schedule… like I did.

With some smart studying habits and perseverance, you too can not only add the letters CPA to your resumé and LinkedIn profile, but receive a designation that will benefit you for the rest of your professional life.

Jack McCracken, CPA, received his license in 2016.

He is a staff accountant with Nisivoccia LLP in the governmental entities department. Jack is a member of the NJCPA and can be reached at jmccracken@ nisivoccia.com.

NEW JERSEY CPA | MAY/JUNE 2018

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BUSINESS ADVISORY SERVICES

HIPAA Compliance for Healthcare Clients

BY DEBORAH A. NAPPI, CPA, SAX LLP

As technology continues to expand in the healthcare sector with the use of electronic health records (EHR), medical devices, telehealth, telemedicine, e-prescribing and smart phone medical applications, cybercriminals are increasing their launch of attacks on both small and large healthcare organizations. In recent months, healthcare organizations have been forced to pay ransom for the release of medical records in order to mitigate the disruption to their organization while ensuring their patients’ safety and quality of medical care. Today more than ever, it is critical to properly safeguard patient information against such attacks.

As the healthcare industry began to transition from paper processes to the use of electronic systems for administrative and clinical functions, the Health Insurance Portability and Accountability Act of 1996 (HIPAA) required the Secretary of the U.S. Department of Health and Human Services (HSS) to develop regulations to protect the privacy and security of individuals’ health information.

The burden of protection falls upon medical providers, covered entities (CE) defined as health plans, heathcare clearinghouses, and healthcare providers who electronically transmit any health information, and business associates (BA), which are outside entities that create, receive, maintain or transmit protected health information in the course of performing their duties on behalf of the healthcare entity. BA services include legal, accounting, consulting, data aggregation, health information technology and subcontractors of business associates. A risk assessment and documentation of the BA’s information technology systems is also required. BAs are also held directly liable for HIPAA violations.

The result of this requirement was the development of the HIPAA Privacy Rule which established national privacy standards for the protection of an individual’s health information, and the HIPAA Security Rule which established national standards for the security of electronic Protected Health Information (ePHI). In

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addition, the Breach Notification Rule requires CEs and BAs to provide notification following a breach of unsecured Protected Health Information.

HIPAA PRIVACY RULE The Privacy Rule is the most common HIPAA compliance rule. It applies to both manual and EHR systems and includes any form of protected health information, including payment. This rule has the most stringent requirements for compliance due to its significance. Providers must inform patients of the healthcare practice’s privacy and security procedures regarding the patient’s health records.

While a healthcare provider owns the patient’s medical records, the patient has the right to access the file and to obtain copies of such records. HIPAA requires medical records to be maintained by a provider for at least six years after the later of the date of creation or the date when last in effect. Longer holding periods may be required by state laws.

The Security Rule was established for security protection of electronic medical

records by the adherence of security protocols to avoid cyber attacks and data loss.

The Security Rule has several safeguards and requirements which must be adhered to: 1. Administrative safeguards: Actions, policies and procedures to prevent, detect and correct security violations.

Healthcare providers are required to perform a risk analysis as part of their security management process. This process would evaluate the likelihood and impact of potential risks to electronic patient medical records and then implement security measures to address the risks identified. Documentation of the security measures along with continuous maintenance of these measures is required. In securing both manual records and electronic medical data, there are many questions that should be asked of your healthcare organization.

At a minimum, the basic issues that should be addressed are as follows: yy How are your paper files and computer files secured? yy How have you ensured that only authorized personnel access or

BUSINESS ADVISORY SERVICES

transmit EHR information? yy What emergency provisions are in place in case of a system failure?

Are timely back-ups available, and where are they stored? yy How does the system recovery work, and how often is it tested? yy Implementation of data encryption methods yy Secure email to patients; Secure patient portals yy Breach notification policies 2. Physical safeguards: Safeguards to protect against natural and environmental hazards and unauthorized use.

3. Organizational standards: Require CEs to have contracts with BAs that will have access to ePHI. 4. Policies and procedures: The CE must adopt reasonable and appropriate policies and procedures to comply with the provisions of the Security Rule.

HIPAA privacy and security rights limit the release of patient health information to third parties without patient autho-

rization. In addition, there are specific requirements for the release of records for deceased patients and minors. There are more stringent requirements under HIPAA for both federal and state laws regarding the release of super-confidential medical records. These entail records containing drug and alcohol, mental health, and HIV information. In light of the opioid crisis, the HHS released guidance in October 2017 as to how providers may share health information with a patient’s family if the patient’s decision-making capability is impaired.

HIPAA compliance is increasingly important in this climate of cybersecurity attacks to protect health information from unauthorized access which can result in data breaches, loss of patient data and assessed penalties. Ransomware attacks and hacking incidents are deemed to be a breach of protected health information for both the CE and the BA. The penalties associated with the failure to perform a risk analysis and have the proper processes in place can be quite costly to your organization and require immediate, consistent and thorough attention.

HIPAA ENFORCEMENT RULE The HIPAA Enforcement Rule took effect in 2006 and allows fines to be assessed for noncompliance of all HIPAA rules and not just the privacy rules. There are an increasing number of fines assessed on various breaches as well as federal audits under the enforcement rule which range from the smallest provider to the largest, multi-state health plan.

Deborah A. Nappi, CPA, MST, is a senior manager at SAX and a member of the firm’s heathcare practice. She has over 20 years of experience performing accounting, consulting and analysis of key state reports and billing for various medical practice groups, surgery centers and medical device companies. She is a member of the NJCPA and can be reached at dnappi@saxllp.com.

NEW JERSEY CPA | MAY/JUNE 2018

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CORPORATE ACCOUNTING

How CPAs Can Deliver Value Via Non-Financial Reporting

BY DR. SEAN STEIN SMITH, CPA, LEHMAN COLLEGE

Tax reform, and the ripple effect of changes that are bound to be generated from the passing of this legislation, are already causing numerous questions, challenges and opportunities for individuals and business owners. As if that was not enough, the twin forces of blockchain and artificial intelligence (AI) are headline topics at virtually every accounting conference, show and exposition. Both technology platforms, independent of each other, have the potential to generate tremendous amounts of disruption for CPAs and their businesses. Clearly, blockchain and AI are in the early stages of adoption, but these are trends that CPAs should keep an eye on in 2018.

Technology changes aside, there is also increased interest in attracting new talent to businesses, and the growing importance of sustainability information to different stakeholder groups. These converging trends represent both an opportunity and challenge for accounting professionals. Many of the skills and competencies CPAs bring to bear, namely the quantifying, reporting and explaining of data, are in demand due to the increased availability of information. The challenge of this exact situation is that, while financial reporting and data attract most of the attention, non-financial and operational information are what create and drive those financial results.

Let’s take a look at a few of the things CPAs should keep in mind when reporting non-financial data: 1. Figure out what matters to your stakeholders. Every business is different, and is driven by a unique set of operational information, so making sure to understand what stakeholders need is an important first step. Whether it is consumer information, compliance reporting, environmental issues or the return on business development projects, figuring out this first step is critical for making non-financial information understandable.

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2. Make it part of the conversation.

Non-financial information is obviously important to every business, but it’s easy to lose focus when dealing with both the day-to-day operations and financial pressures of running a business.

It is up to the CPA to keep this conversation going. Operations drive financial results, and if you help your company’s management team better run the business, that both helps the business and increases the value you deliver.

3. Establish metrics and targets. One of the biggest challenges for non-financial reporting is a lack of metrics and standards, which make it more difficult to set a baseline or goals moving forward. Working with your colleagues to set goals means that everyone is more likely to stick to them and find ways to integrate them into financial decision making. While it may seem difficult to find a place to start this process, there are resources at your disposal. Don’t be afraid to use external sources at the

AICPA or NJCPA level, and information at institutions like the Sustainability Accounting Standards Board (SASB).

4. Communicate these findings to stakeholders. Non-financial reporting, and the findings that you are able to generate, can be used to differentiate your business in the marketplace. CPAs can leverage their background and expertise in creating non-financial reports to be a valuable member of the company’s management team.

Non-financial reporting is an area that may have not caught your attention in the past, but can differentiate you moving forward.

Dr. Sean Stein Smith, CPA, DBA, M.S., M.B.A., CMA, CGMA, is an assistant professor at Lehman College. He is a member of the NJCPA Content Advisory Board, Student Programs & Scholarship Committee, Emerging Leaders Council, Cannabis Advisory Group, Nonprofit Interest Group and Accounting & Auditing Standards Interest Group.

Sean can be reached at drseansteinsmith@gmail.com.

FINANCIAL PLANNING SERVICES

Finding Financial Planning Candidates Among Your Existing Tax Clients

BY RYAN BERDNIK, CPA, CFP, MAZARS USA

The need for financial planning services increases as the population ages. The median age of the nation is now 37.9 years, an increase of approximately 2 percent over the last five years. Over the same period, revenues from financial planning services have increased 56-percent faster than revenues from traditional accounting and auditing services. While nearly everyone is in need of some sort of financial planning service, ideal candidates can be easily identified with information that tax preparers already have.

Just as financial statements tell the story of a business, an individual’s tax return tells more than just taxable income. The source documents used to prepare the return can be used to piece together the taxpayer’s financial environment. This historical data can be used to help clients plan and prepare for future financial obligations. Unfortunately, deadlines during busy season can often cause CPAs to miss this opportunity. Financial planning concerns can easily be re-examined and discussed with the client post tax day.

The existing relationship and knowledge of the client’s background gives CPAs a head start in the financial planning process.

AGE Age is one of the most important factors to consider when analyzing the client’s background. Financial planning can begin at all stages of life. The client’s age can be plotted on a figurative timeline along with

common estimates used in the industry.

Examples include: the average age to attend first year of college is 18, the full retirement age is up to 67, and the average life expectancy is 84.3 for men and 86.6 for women. The client’s age in relation to these estimates can help identify which specific set of financial services, such as education, insurance, investing, retirement or estate planning, will be the most beneficial.

CHILDREN If the taxpayer has a child during the tax year, this has the potential to lead to financial planning services for education and insurance. Assuming the taxpayer plans on their child attending a post-secondary school around age 18, the client can be informed about different education savings vehicles (e.g., 529 plan) and related tax implications. Projections can be used to demonstrate how the future value of contributions is affected by changes in tuition inflation rates, timing of contributions, amount of contributions and after-tax rate of return on contributions. The family may need to consider life insurance policies to supplement income in the event of one wage earner’s death.

INVESTMENTS AND SAVINGS The ability to save money drives progress toward reaching the financial goals established in the plan. However, there must be income before there can be savings. The

individual tax return details the taxpayer’s primary sources of income. Tax returns without any investment activity can raise a red flag in terms of investments for financial planning purposes. It is possible contributions are being made to a tax-deferred retirement account. That information can be found on the client’s W-2, K-1 if a partner, or perhaps an annual statement for nondeductible contributions. Investing and retirement planning services can help clients identify the savings vehicles, timing and amount of contributions necessary to finance their life after work. Health care costs continue to be the largest expense in retirement for most. The client’s goals in retirement may not be possible if they did not save for unexpected medical expenses in addition to cost of living. Similar time value of money calculations can be used to visualize the benefits of early savings.

ESTATE PLANNING Estate planning services can be of benefit to those who have not exhausted their financial assets at their time of death. Clients who own a business could also benefit from estate planning services depending on how they wish to transition ownership.

Recommendations can be made to achieve the client’s goals once they express their desires for their assets after death.

Because every client is unique, a financial plan needs to be customized around their goals, timeline and ability to save.

The CPA may not be aware of the client’s exact goals before beginning the financial planning process, but the information already on hand can help identify potential areas of added value for the client. Once the client’s wishes are clear, the CPA can offer insight and help them achieve their financial goals.

Ryan Berdnik, CPA, CFP, is a senior in the entrepreneurial services group at Mazars USA LLP. He is a member of the NJCPA and can be reached at ryan.berdnik@mazarsusa.com.

NEW JERSEY CPA | MAY/JUNE 2018

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FIRM & PRACTICE MANAGEMENT

Professional Liability Developments

BY JOHN RASPANTE, CPA, CPA PROTECTOR PLAN AND HERBERT M. CHAIN, CPA, ST. JOHN’S UNIVERSITY

Jean-Baptiste Alphonse Karr has said, “The more things change, the more they stay the same.” While the accounting profession has undergone massive changes in the past few years, little has changed in professional liability causes of actions faced by CPAs. Failures to detect fraud, missed elections and late filings continue to plague CPA firms of all sizes. While claims generally repeat themselves year to year, there have been some recent developments worthy of discussion. This article will focus on the following claim trends: Foreign Bank Activity Reports (FBARs); late and non-filed returns; and network security lapses.

FBARs It’s no surprise that because of the intense IRS scrutiny of offshore bank accounts coupled with criminal prosecution of such taxpayers, CPAs would be targets of such egregious clients. This knee-jerk reaction to sue the CPA after tax assessments are issued is not uncommon. The issue with FBARs results from the IRS being relentless and focused on this area of compliance. Strong engagement letter language (see sample

language below), possible standalone confirmations of the existence or lack of any foreign bank account, and affirmative responses to the two questions on Schedule B are essential steps to defend these types of claims.

In addition, a well-thought plan must be in place if the CPA concludes there are non-filed FBARs, and a discussion of the offshore voluntary disclosure program must be considered. Since immunity from criminal prosecution may be possible, consideration must be given to securing competent legal counsel. Once the client intends on entering the voluntary disclosure program, the CPA and/or legal counsel should discuss the ramifications of the opt-out provisions with the client.

LATE AND NON-FILED RETURNS Over the past two years, there have been a greater number of claims alleging failure to file and late-filed returns as well as non-filings in other states and jurisdictions where filing was required. Failure to file extensions and required estimated tax payments are more common. The pattern of these types of claims is unexplained. Perhaps

SAMPLE ENGAGEMENT LETTER LANGUAGE

Please note that any person or entity subject to the jurisdiction of the United States (including individuals, corporations, partnerships, trusts, and estates) having a financial interest in, or signature or other authority over, bank accounts, securities, or other financial accounts having a value exceeding $10,000 in a foreign country, shall disclose such relationships to us. Although there are some limited exceptions, filing requirements also apply to taxpayers that have direct or indirect control over a foreign or domestic entity with foreign financial accounts, even if the taxpayer does not have foreign account(s). For example, a corporate-owned foreign account would require filings by the corporation and by the individual corporate officers with signature authority. Failure to disclose the required information to the U.S. Department of the Treasury may result in substantial civil and/or criminal penalties.

If you and/or your entity have a financial interest in any foreign accounts, you are responsible for providing our firm with all the information necessary to prepare Form TD-F-90-22.1 required by the U.S. Department of the Treasury on or before April 15th of each tax year. If you do not provide our firm with information regarding any interest you may have in a foreign account, we will not be able to prepare any of the required disclosure statements, and, accordingly, do not accept any responsibility for the resultant liabilities that may arise.

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these have been caused by the increased reliance on technology, work overload or the simple stresses of tax season. The trend is increasing and disturbing in the frequency of occurrence. A “back-to-the-basics” approach should be used to remedy this trend of claims. Quite simply, good controls, proper team meetings and communications, tracking systems, and a review of the various nexus requirements for out-of-state filings may help mitigate the risk of these types of claims.

CYBER Cyber perils are the most common, new and emerging type of claim, and may result in the most significant losses — tangible and intangible. For many years, CPAs felt the large retailers and other industries were the targets of these types of claims and not CPA practices. This perception has changed significantly over the past two years. Identity theft, servers held for ransom, mobile equipment lost and data breaches are just a few of the perils faced

by CPAs that culminate in professional liability claims. CPAs face this significant risk on two fronts: their own operations and the protection of confidential client information. The damages include regulatory sanctions, legal fees, forensic services, data restoration and the intangible loss — damages to reputation.

Data intrusion testing, password protection and employee training are among the best practices in combating these types of claims. Further, transferring of these risks by securing proper and sufficient cyber liability insurance coverage must be considered.

John F. Raspante, CPA, is director of risk management at CPA Protector Plan. He is a member of the NJCPA Content Advisory Board and Accounting and Auditing Standards Interest Group and can be reached at jraspante@bbprograms.com.

Herbert M. Chain, CPA, is an assistant professor and executive director of the Tobin Center for Executive Education at St. John’s University. He can be reached at chainh@stjohns.edu.

GOVERNMENTAL & NONPROFIT

The Annual Audit: Making a Case to Embrace It

BY STEPHEN F. McCARTHY, CPA, THE PRESIDENTS FORUM

The annual audit is often perceived as a burden, perhaps even a threat, at many companies. The potential to uncover weaknesses or shortcomings is never pleasant.

However, in adopting this risk-averse mindset, many opportunities can be lost.

The annual audit offers an opportunity for organizations and auditors to enhance a good working relationship. More importantly, an audit presents an opportunity to gain valuable insights into the business, identify efficiencies and clarify opportunities for growth.

How then do those who oversee auditors — CFOs and audit committees — manage the process to achieve value-added benefits? How can they set themselves up for success? The answer to that lies in focusing on the three things organizations generally want from auditors: quality, superior value and risk reduction. Let’s assume that risk reduction is already built into the audit process and focus on quality and superior value.

QUALITY: THE SELECTION OF THE AUDITOR A new study by the AICPA Peer Review team revealed a set of factors that has strong correlation with audit quality. To ensure quality, according to the Center for Audit Quality (CAQ), the audit committee must be very careful in selecting an audit partner. It is critical to thoroughly examine an audit partner’s qualifications and engagement experience within the specific industry. And it is crucial that the audit partner for the engagement is the lead engagement partner on similar audits. This seems like common sense, but it can be all too easy to take shortcuts or make assumptions in the selection process.

ENSURING SUPERIOR VALUE: SETTING EXPECTATIONS IN THE AUDIT PLANNING STAGE The audit committee or CFO must meet with the auditors well before the audit to discuss the auditors’ responsibilities and provide input into the scope of

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work. At this stage, it is important to encourage collaboration and innovative approaches in the audit. And this is when value-added enhancements or services should be discussed. Some examples to consider include information system reliability, risk assessment, performance measurement, updating policies, strategies for long-term prosperity and various data visualization techniques to present data in new and compelling ways. Perhaps the most important step: ask the auditors themselves to make suggestions. A good auditor will have relevant experience with other clients, which they may be able to share. There are numerous ways an auditor can add value, while still maintaining professional requirements related to independence.

Art Glass, CFO of Mount Saint Mary College in Newburgh, NY, suggests the following tips to manage an audit to provide value-added benefits.

1. Keeping the organization informed of changes to GAAP and proposed changes to GAAP under consideration; 2. Providing information about other similar organizations and how they are implementing GAAP changes and reporting; 3. Providing comparative data from other organizations that add value to decision making; 4. Acting as an additional set of eyes and ears to aid in effective financial management and internal controls.

Glass believes good auditors have a global perspective of the organization and therefore can make valid objective recommendations.

ADDED VALUE MAY NOT BE RELATED TO THE AUDIT Glass mentioned changes to GAAP as an area where educational benefits may flow from an audit beyond audit observations.

The Financial Accounting Standards Board (FASB) issued an Accounting Standards Update in August 2016: (ASU) No. 2016-14, effective December 15, 2017.

The key areas of the financial statement that will be impacted by this new standard include the following: yy Net asset classifications yy Required liquidity disclosures yy Investment return reporting yy Statement of cash flows presentation yy Functional expense reporting Insight on new standards is just one example of the way auditors can add value in the form of client education.

One last idea on delivering value, as Glass stated above, is to provide comparative data from other organizations.

Auditors have substantial information on industry trends and benchmarks. Without divulging confidential information, auditors can provide this data in a way that helps enhance decision making.

To summarize, overseeing external auditors is the responsibility of the board, audit committee and the CFO. Realizing high quality, superior value and risk reduction can be a challenge. For some, the requirements related to the audit are burdensome and part of an over-regulated environment.

Nevertheless, the auditors’ report provides a comfort level for stakeholders. Moreover, in today’s challenging environment, obtaining added value is highly advisable.

And therefore, a related objective should be to embrace feedback and act both promptly and wisely. If one thinks about financial statements as providing information for the company and its stakeholders to make better decisions, then the results and benefits of a superior audit can be beneficial for all.

Stephen F. McCarthy, CPA, CGMA, M.B.A., is the owner of The Presidents Forum. He is a member of the New Jersey Society of CPAs and can be reached at stevemccarthy@thepresidentsforum.com.

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PROFESSIONAL DEVELOPMENT

How to Manage People

BY RACHEL ANEVSKI, MATTERS OF MANAGEMENT

Would you believe that there are over 450 million results on “how to manage people” using Google search? Let’s put that into perspective: there were only 7 million results about Kim Kardashian, 46 million about the Bible and 150 million about “how to lose weight.” Hence, managing people would appear a rather important query.

For some professionals, it is the inherent ability to read others and leverage their strengths and weaknesses that makes managing people easy for them. But for many others, it is an unknown abyss, and managers often rely on textbooks, training and even executive coaches to help them gain mastery over managing others.

There are three key steps to effectively managing people: yy Know yourself. yy Seek to understand your people. yy Flex your style to accommodate them.

KNOW YOURSELF Managing others lies in the deeper understanding of oneself and how one can relate to others in a way to motivate them towards efficiency and proficiency. In other words, get to know your style first then seek to understand others. It is in the recognition of behaviors that help make managing others a breeze. You can learn your style by taking a management behavioral profile survey such as DiSC profile; this is a tool that has been known to decipher personality traits and teach you more in-depth about how to communicate with others who are like you and those who are not. It can alert you to your behaviorisms that are perhaps of a dominant or detailed nature which may clash with a subordinate who requires a more sensitive approach or an approach that is bottom-line oriented.

Psychologists have been investigating personality traits since the 1930s, and empathy and delegation still rise to the top as key attributes for successful managers.

Understanding how confidently you make decisions, how you interact with others, the pace in which you work and how

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frequently you follow rules are all pillars to understanding yourself in a way that supports your role in managing others. If you dare, you can go one step further and ask your peers to evaluate you based on your assumption of your own behavior. An exercise that supports this is known as the Jahari Window. In completing the Jahari Window, you can gain a bird’s eye view into how well you know yourself by comparing your thoughts about who you are to how people who interact with you daily perceive your behaviors. If you embark on a Jahari Window exercise, prepare yourself to learn from the results which may not always be to your liking.

SEEK TO UNDERSTAND YOUR PEOPLE Once you have a strong understanding of your own behaviors and perhaps how your style changes when under work stressors, you can pursue understanding the members of your team. Not everyone is a people watcher, but the best managers know their people’s styles, from the timeliness of their morning arrival, to how they work to the deadline, to the way in which they receive communication, to how they interact with others. Inventory your people not only by their job responsibilities but also by their approach to matters of their job.

There are generally four types of workplace behaviors: the captain, the chatty Cathy, the cheerleader and the cop.

The captain will need to be given swift directive. The chatty Cathy needs to first build relationships before they can get to work. These staff need to be reminded how to work alone. The cheerleader wants to be a valued member of the squad so it’s up to you to include them in opportunities. The cop wants all the rules and all the details so that they can investigate the right way to complete a project.

Next, balance your team. If you have a team full of chatty Cathys, no work will ever be done. A team of all cops will come to the right answer but it may take them significant time to achieve it. A team

heavily staffed with captains will assure lots of conflict leaving no one to complete the work. And finally, a team full of cheerleaders will be kind and even keeled, but unfortunately few decisions will be executed, as a team full of cheerleaders requires a captain.

FLEX YOUR STYLE Recognizing who you are and having the ability to flex your approach to guide your staff is key. Though there is somewhere between a million and a billion approaches to how to manage people, at the end of the day it’s about human interaction and how we all get along to accomplish a common goal. Seek first to understand yourself, guided by your approach to understanding others and together the two shall meet and excel in the workplace. Kumbaya.

Rachel Anevski, MAOB, PHR, SHRM-CP, is the founder and CEO of Matters of Management, LLC, a consulting and talent acquisition firm specializing in professional services. She can be reached at rachel@mattersofmanagement.com.

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NEW JERSEY CPA | MAY/JUNE 2018

21

TAX

On the Move: Change of Domicile

BY BARRY S. KLEIMAN, CPA, UNTRACHT EARLY

According to a recent Yahoo! Finance report on moves within the U.S., New Jersey shifted from balanced (where moves in and out of the state are about equal) to outbound. New Jersey now joins New York, which has been outbound for more than 20 years. Although it is a bit early to measure any increase in migration because of the state and local tax (SALT) limitation under the Tax Cuts and Jobs Act of 2017, it is certainly a thought on clients’ minds.

WHAT IS DOMICILE? Domicile is the place in which an individual deems to be their true, fixed, permanent home and to which they intend to return after a period of absence. While a client may have several residences and even be a resident of multiple states, he or she can only have one domicile. It is a state of mind. If given a dose of truth serum, how would your client answer the question, “Where is home?” Once established, domicile continues until it is abandoned and a new domicile is established. This may be referred to as the “leave and land” concept.

Moving to a new location does not change domicile if the intent is to return to the original location.

WHY IS DOMICILE IMPORTANT? Domicile is important in determining a client’s primary state of residence for income and estate tax purposes. For income tax purposes, resident individuals are taxed on their worldwide income by their domiciliary state. Nonresident individuals are only taxed on their income sourced to a particular state. For example, a client who successfully changes their domicile from New Jersey to Wyoming, a state that does not impose an income tax, would owe no state tax to this new domiciliary state.

The client may owe state tax to New Jersey or any other state to the extent there is income sourced to that state.

AN AUDITOR’S PERSPECTIVE The process of ascertaining intentions regarding domicile — the crucial question in

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a residency audit — is a subjective inquiry for the auditor and can be a difficult one.

How does an auditor determine what is in a taxpayer’s mind? There are two essential elements to a change of domicile: physical presence and intent. Convincing an auditor of intent can be difficult, especially if a client retains a home in a state that was previously a principal residence.

The burden of proof is on the party asserting the change, namely, the taxpayer with respect to an outbound change in domicile. The taxpayer must prove to the auditor with clear and convincing evidence that they not only maintain a physical presence in the subsequent state but that they also possessed the intent to leave the prior state.

A change in domicile does require a serious commitment and change in lifestyle that some clients are not prepared to undertake. There is no minimum checklist of requirements that can be easily fulfilled to ensure such a change is respected. Clients must make a genuine commitment to move to the new location and, most importantly, break ties with the old location.

Domicile is generally determined by five primary factors: yy Home: Number, size and value of residences yy Active business involvement: How and where a taxpayer earns a living yy Time: Where a taxpayer spends time during the year yy Items ‘near and dear:’ Location of possessions of significant financial or sentimental value yy Family connections: Residence of spouse and minor children (and family pets) Although subordinate to the primary factors, secondary factors should also be considered, including: yy Address at which taxpayer receives bank statements, bills and other correspondence yy Location of safe deposit boxes yy Location of auto registrations and licenses

yy State in which taxpayer is registered to vote yy Country club memberships yy Citation of domicile in wills, trusts and legal documents yy Active involvement in civil organizations and houses of worship yy Location of doctors and medical records To assist in evaluating the primary factors, auditors will review client records such as moving bills, calendars, credit card statements, telephone records, insurance policies, travel receipts and the like. Auditors may also rely on personal observations via home visits and online inquiries, including searching through social media sites.

Clients may receive significant tax advantages by effecting a change in domicile, but it does require a comprehensive change in lifestyle, continued diligence and maintenance of detailed records to support such change.

Barry S. Kleiman, CPA, is a principal at Untracht Early LLC. He is a member of the NJCPA Content Advisory Board and the State Taxation and Federal Taxation interest groups. Barry can be reached at bkleiman@untracht.com.

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23

TECHNOLOGY & INFORMATION MANAGEMENT

Why CPAs Shouldn’t Fret About AI Right Now

BY DIV BHANSALI, ACCOUNTANTSWORLD

CPAs have varying thoughts on artificial intelligence (AI), ranging from concern to confusion to unabashed excitement.

AI isn’t something to fret about — at least for now. There’s no doubt that AI is changing the way some CPAs operate, particularly corporate accountants. However, that’s been less the case for small and mid-sized public accounting firms.

This is largely due to one major factor: their small business clients. Rather than looking to advanced technologies to help clients, CPAs in public practice don’t need to look any further than their own data to grow both their firm and their clients’ businesses.

THE CURRENT LANDSCAPE AI requires massive amounts of data. Small business owners already struggle with basic tasks like managing their books or prepping their taxes. In fact, many end up making mistakes. This becomes a major problem for AI. In order to learn how to populate data, AI needs a role model, which is typically the user. If the user makes mistakes, they become compounded as AI would unknowingly replicate those errors.

As a result, CPAs spend tremendous amounts of time fixing those mistakes. This causes them to miss opportunities to provide real-time counsel and advice, such as flagging any potential issues to their clients — an aspect that many business owners look for in their financial partners.

SMALL DATA NOW, BIG DATA LATER AI can help corporate accountants understand the broader industry and benchmark where their company stands against global competitors. Small business owners, however, do not need that macro-level comparison.

As such, CPAs can help their clients thrive most by focusing on small data.

CPAs can monitor cash flow, look for unusual receivables activity and discover new revenue opportunities for their clients. This

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is the real value that deepens their relationship with small business owners.

The good news is that AI isn’t needed to gather and analyze small data. Today, cloud-based professional accounting software is already capable of automatically aggregating that data and delivering real-time insights, making it easier for CPAs to help clients manage their finances.

Because of the real-time integrated capabilities of the cloud, CPAs can better prepare for any issues small business owners may encounter. Dashboards and alerts can pinpoint changes in payables or receivables levels, or dips in cash flow. This means CPAs can analyze the complete picture of a client’s finances to offer real-time strategic advice and provide significantly deeper value beyond preparing simple financials and doing taxes.

WHAT TO REALLY EXPECT FROM AI Once small business clients are more ready for AI, there will be a growing number of opportunities for both business owners and CPAs to use those tools to advance their business goals. For example, CPAs with predictive intelligence will be able to use algorithms to better profile the needs of each individual client.

Additionally, with these tech advancements, the skill sets required for success in accounting will also change. Interpersonal communication and leadership skills will become as (or more) essential than the traditional quantitative focus of most CPAs. Accounting staff will need to become proficient at operating these AI tools and interpreting their output. This may also mean that fewer data-entry roles will be required in the future given that most entry and reporting will be automated. But not to worry, the strategic and advisory value of CPAs will actually grow as a result.

That said, change can be distressing. Accounting partners may encounter pushback from colleagues and even clients. It’s up to them to emphasize, teach and highlight the benefits of using new technologies.

Big data and AI will eventually open many doors for the accounting industry. However, if CPAs look too far ahead, they run the risk of missing more immediate opportunities to help their clients. By working with small business owners to extract the full value of their own data, CPAs can improve client relationships and advance their practices.

Div Bhansali is Vice President of Marketing for AccountantsWorld, the pioneer in innovative cloud computing solutions for accountants.

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CONVENTION & EXPO JUNE 12-15, 2018 BORGATA | ATLANTIC CITY, NJ 70+ Exhibitors 15+ Product & Service Categories 1,000s of solutions to help you succeed!

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iscover the industry’s latest and greatest business solutions at the Annual Convention’s Exposition. This is your opportunity to stay up to date on products and services shaping the profession, discuss them, and even experience some light training. What’s more, some exhibitors will offer discounts and special promotions that will enable you to save big!

Take a look at the companies that will help you be more effective and profitable.

Learn more and register at njcpa.org/convention.

On the opposite page, see some of the companies to look out for.

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27

NJCPA NEWS

2018/19 Executive Committee and Board of Trustees Meet the NJCPA officers and trustees who will be serving June 1, 2018, through May 31, 2019.

EXECUTIVE COMMITTEE

PRESIDENT

PRESIDENT-ELECT

SECRETARY

SARAH KROM, CPA

KYLE SELL, CPA

SKC and Co., CPAs, LLC

Deloitte

EDWARD O’CONNELL, CPA, CGMA, CFF, CFE

TREASURER

IMMEDIATE PAST PRESIDENT

CEO & EXECUTIVE DIRECTOR

HARRY P. WILLS III, CPA

EDWARD I. GUTTENPLAN, CPA, MBA, CGMA

RALPH ALBERT THOMAS

Bowman & Company LLP

WithumSmith+Brown

Wilkin & Guttenplan, P.C.

To learn more about our Executive Committee members, visit njcpa.org/about/board.

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MAY/JUNE 2018 | NEW JERSEY CPA

NJCPA

BOARD OF TRUSTEES

JORDAN D. AMIN, CPA, MST

GREGORY A. BEDARD, CPA, CGMA

AMY Y. BOTH, CPA

EisnerAmper LLP

Prudential Financial

Neral & Company, P.A.

ROBERT J. BROWN JR., CPA, ABV, CFE, CFF, CITP Cowan, Gunteski & Co., P.A.

MELANIE COBB, CPA, CGMA

MICHAEL J. COLETTI, CPA

JASON LAURETTA, CPA

JUSTIN D. O’HORO, CPA, CITP, CGMA

Abacus Financial LLC

Mazars USA LLP

ADP

WithumSmith+Brown

KATHLEEN F. POWERS, CPA

MEGAN A. SARTOR, CPA

SHAUNE SCUTELLARO, CPA

JUNE TOTH, CPA CFF, CITP, CGMA

Matheny Medical and Educational Center

SAX LLP

CohnReznick LLP

ZBT Certified Public Accounting & Consulting, LLC

NEW JERSEY CPA | MAY/JUNE 2018

29

NJCPA NEWS

NJCPA Forensic Group Changes Name To better recognize the changing forensic accounting field, the NJCPA has renamed its Business Valuation, Forensic and Litigation Services Interest Group to the Forensic & Valuation Services (FVS) Interest Group. The change comes as the field of forensic accounting has grown to include more diversified areas of expertise.

Forensic accountants routinely help prepare settlement discussions, identify areas of financial loss, and specialize in fraud investigation or insurance claims.

“We are inviting a larger audience to have more diversity in the room,” says Shaun Maloney, CPA, ABV, CFF, CGMA, manager at EisnerAmper LLP and leader of the NJCPA FVS group. To Maloney, the group shares a passion for problem

solving, investigating and working with area courts, county bar associations and governmental entities.

The business valuation side of forensic accounting, in particular, will continue to grow, he notes, which is why the group is looking to expand membership. There has been a rise in compliance-oriented engagements, such as with financial reporting, and in planning oriented engagements, which include estates, gifts and merger-related issues.

The FVS Interest Group holds four to six meetings per year and offers continuing education and other training in areas such as technology, taxes and performing valuations. “We have many technical sessions which new members could benefit

from,” he says. Its annual conference, typically in September, informs members about the latest trends in valuation, damages, expert witnessing and litigation issues that can impact CPA firms as well as their clients. This year’s conference will be held on September 27 at the APA Hotel Woodbridge in Iselin. Learn more and register at njcpa.org/events.

The name change also fits with a broader movement regarding business valuation.

The National Association of State Boards of Accountancy (NASBA) previously made a change that allows business valuation to be included under the category of accounting and auditing.

To join the FVS Interest Group, go to njcpa.org/groups.

NJCPA Awards $375,000 to Next Generation of CPAs Continuing its commitment to support the future pipeline of accounting professionals, the NJCPA Scholarship Fund awarded more than 375,000 in scholarships to New Jersey college students and New Jersey-based high school seniors entering college in the fall of 2018.

Awards were presented on April 24 at the Scholarship Awards Ceremony at the Pines Manor in Edison.

Fifteen four-year awards of $7,000 were presented along with more than 40 one-year awards of $6,000 each. In addition, the Atlantic/Cape May, Bergen and Mercer chapters as well as firm benefactors presented various sums of

awards to local students. The NJCPA also works with the American Institute of CPAs (AICPA) and the National Association of Black AccountantsNorthern New Jersey (NABA-NNJ) to award a number of minority scholarships.

The scholarship program would not be possible without the generous support of NJCPA members, our 11 chapters and firm/group benefactors.

BENEFACTORS yy Bowman and Company LLP — In memory of Lisa A. Donahue yy CohnReznick LLP yy EisnerAmper LLC

yy Frazer, Evangelista & Company, LLC yy Mazars USA LLP yy Mercer Chapter — In memory of Amy Lowenstein yy Monmouth/Ocean Chapter — In memory of Joseph D. Leone, Jr. yy NJCPA Council of Past Presidents yy PKF O’Connor Davies, LLP — In memory of Stephen F. Manuzza yy Smolin, Lupin & Co., P.A. yy Untracht Early LLC yy Wilkin & Guttenplan, P.C. — In memory of Jules Frankel yy WithumSmith+Brown For the list of scholarship recipients, visit njcpa.org/scholarship.

NJCPA Forms Cannabis Interest Group New Jersey Governor Phil Murphy’s support of legalizing cannabis has prompted the private sector — CPAs, consultants, lawyers, developers, investors and banks — to begin figuring out the ground rules of a potential multibillion-dollar industry.

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MAY/JUNE 2018 | NEW JERSEY CPA

To help our members navigate this fast-emerging industry, the NJCPA has formed a Cannabis Interest Group that will enable the Society and members to share news, insights and best practices as we wait

for the legislative and regulatory process to play out in Trenton.

To join the Cannabis Interest Group, go to njcpa.org/groups.

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MEMBER STORY

know accounting has many transferrable skills,” says Scott.

He didn’t take too long to ponder about getting a CPA, however, when opting to go the accounting route. After a quick read of what courses he was lacking, he became a full-time student for a semester and made up his mind to sit for one section of the CPA exam every time it was offered. The end result? He easily passed the exam on his first try. Soon after, he joined a regional accounting firm, where he remained for about five years.

In It for the Long Haul

BY KATHLEEN HOFFELDER, NJCPA CONTENT EDITOR

Not many CPAs get to play with trucks as a child and then spend whole days evaluating them as an adult. But that’s the case with Scott Fitzgerald. As the assistant controller at Inter-Metro Freight, based in Elizabeth, Scott had to learn the ins and outs of the freight industry — no easy task but a place where he now feels right at home.

To Scott, keeping track of the financials for Inter-Metro Freight means being on top of the transportation for everything from wine and spirits to timber, stone and any other heavy-weight commodity. What started out as an in-house trucking company to assist holding company Fedway Associates of Basking Ridge transport their containerized cargo of wine and spirits from the port and rail to the warehouse door, Inter-Metro has grown into a national truck operation that services ports in New York/New Jersey, Virginia, South

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Carolina, Georgia and California. Its fleet of over 700 new tri-axle chassis (which hold containers) enable the firm to transport in some parts of the country up to 100,000 lbs. at a time, a 20,000 lb. increase over the standard gross vehicle weight limitation across the U.S. “Instead of a customer using 10 containers to import or export their merchandise, they can use eight containers with us,” he explains. “In addition to our tri-axle chassis, our tractors have four axles compared to a standard three-axle tractor. Because of that, we are able to carry extra weight.”

While hauling freight was new to Scott, he was used to dealing with all kinds of customers from his days as an institutional equity trader. After almost 15 years in finance, he made the leap to accounting as the Great Recession of 2007/08 made him realize accounting, not trading, would be a more useful and practical profession. “I

DIGGING DEEPER But it wasn’t until he jumped to the corporate accounting side at Inter-Metro Freight that he discovered what he liked best about accounting — analyzing expenses at a deep level and coming up with solutions for more efficient operations. “I can dig my teeth deeper into the financials. Here, I can see how we’re doing and how I can help with different expenses, such as why a certain expense went up,” explains Scott, who calls himself a problem-solver. “I’m definitely more hands on and more focused.”

With Inter-Metro Freight’s specialty in heavy-weight transportation, Scott has to be on top of the correct billing for each client and state, and even those international customers who want to ship something domestically. “Each state has a limit of the max gross vehicle weight. A lot of times a container is not full by volume but maxed out by weight,” he adds.

That means a lot for Scott to keep track of. So is he up to the challenge? A decisive “yes,” he says. “I do the financials for all of our remote locations, and will do so for future sites also. We are growing that part of the business.”

And while the firm’s expansion plans do come with a cost, they also mean more opportunities to satisfy customers. “We are very vertical here. We have customers that ask us to bring their products off of the ship, get them to another company and truck them somewhere else. It also can mean getting them on the rail,” says Scott, who is always looking for ways to save his company and his customers shipping costs.

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YO U

C A N

CO U N T

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SM

R E C E N T LY F I N A N C E D

$43,000,000 SKILLED NURSING FACILITY

$32,000,000 COLLEGE STUDENT HOUSING/RETAIL

$13,000,000 OWNER-OCCUPIED CONSTRUCTION

$4,500,000 REVOLVING LINE OF CREDIT

3 www.Provident.Bank

NEW JERSEY CPA | MAY/JUNE 2018

FAIRLEIGH DICKINSON UNIVERSITY

Master of Science in Taxation • Designed to meet the educational and training needs of tax professionals.

• Provides both practical knowledge and technical expertise.

• Benefits both entry level and experienced professionals.

• Faculty have outstanding academic credentials and strong professional backgrounds.

• GMAT may be waived for CPA, EA, CMA, CFP, JD, and MBA from AACSB accredited schools and/or based on substantial work experience in tax, accounting, or financial planning.

• University Provost Scholarships available for qualified students.

• No classes during peak tax season. Some classes held Saturdays and summers.

• Program is gradually transitioning to online delivery starting in fall 2017.

• Offering important electives such as ASC 740, International Tax, S Corp, Financial Products, and others.

• Graduates employed at the Big 4, mid-sized regional firms, small firms, IRS, and corporate tax departments.

MST @ FDU: UNLOCK YOUR POTENTIAL !

For more information www.fdu.edu/tax Contact MST Director R. West west@fdu.edu 973-443-8869 4

MAY/JUNE 2018 | NEW JERSEY CPA