September/October 2016

p. 26

Magazine of the

New Jersey Society of Certified Public Accountants

Transitions The Younger CPA Firm, p. 4 The New Retirement, p. 6 The CPA Migration: What Got You Here Won’t Get You There, p. 8 Technology’s Impact on the CPA’s Role, p. 10

Sept • Oct 2016

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September • October 2016

Ralph Albert Thomas, CGMA Chief Executive Officer & Executive Director rthomas@njcpa.org

Ellen C. McSherry, CGMA

features 4

Chief Operating Officer emcsherry@njcpa.org

Don Meyer

Chief Marketing Officer dmeyer@njcpa.org

6

Rachael Bell

Managing Editor rbell@njcpa.org

Elizabeth Quinones Content Specialist equinones@njcpa.org

The New Jersey Society of Certified Public Accountants 425 Eagle Rock Avenue Roseland, NJ 07068-1723 973-226-4494 njcpa.org #njcpamag Read New Jersey CPA digital at njcpa.org/newjerseycpa.

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The Younger CPA Firm – An increasing number of CPAs are opening their own firms before the age of 40. Here’s why younger CPAs may hold the secret strategy for firm growth.

The New Retirement – Smarter planning will allow baby boomers to better enjoy their longer years of retirement. Staying active and re-strategizing finances are some of the ways retirees can thrive in these years.

2 Close Up A Strategic Focus on Advocacy 12 A&A Buzz NFP Financial Statement Changes on the Horizon 14 Best Practices Continuous Recruiting

21 Tax Talk A Look at the Presidential Candidates’ Tax Platforms 22 Tech Center Document Retention Today 34 Young Professionals Keep Your Eye on the Prize: Pursuing the CPA

The CPA Migration: What 15 Corporate Finance 35 Legislative Views Got You Here Won’t Get You Reverse IPOs: A Potentially Good News, Bad News in There – Like it or not, change is Quicker Route to a Public the State Capitol inevitable. Suit yourself up for longListing term success by learning how to 36 Member Profile adapt to, grow with and embrace 16 Financial Planning Twin CPAs Share Unique the new accounting landscape.

Retirement Accounts: New Bond From Childhood Rule Requires Disclosures, to Accounting Fiduciary Responsibility

Society Pages 18 Forensic File Get Involved, 23 Technology’s Impact on the Collaborative Divorce: CPAs Member Benefits, 23 CPA’s Role – Evolving technology Play a Significant Role in the Classifieds, 24 has had a big impact on CPA firms Newest Form of Alternative Women of Note, 26 of all sizes. The growth of advisory Dispute Resolution services is part of that revolution.

Here’s how you can successfully 20 Small/Sole Practitioner navigate this accounting vertical.

You and Third-Party Verification

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. 59 Copyright © 2016 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.

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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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A Strategic Focus on Advocacy B Y D ON MEYER, NJCPA C HI E F M ARK E TI NG O F F I C E R

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ne of the strategic pillars supporting the NJCPA’s mission is to “advocate for the CPA and public interests.” This pillar’s focus is twofold: supporting ongoing advocacy for all CPA licensing and professional issues within the regulatory environment, and being an active participant regarding issues that the organization believes are good for business and the public interests.

“Members are aware that we work with lawmakers who are committed to the issues important to the CPA profession, but that engagement would not be possible if we worked with them on CPA-specific issues only,” said NJCPA CEO and executive director Ralph Albert Thomas, CGMA. “In order to have an impact in Trenton, we need to be active and visible on a host of issues that impact more than just our 15,000 members.”

In the spring of 2016, the NJCPA partnered with the public affairs firm Kivvit to undertake a comprehensive strategic planning process to guide the organization’s advocacy efforts for the next three years.

Prior to the development of this plan, Kivvit conducted an NJCPA member survey which revealed support for greater activity in the state Capitol.

When asked what the top political priorities of the NJCPA should be, nearly six in 10 members responded, “advocating for legislation important to the CPA profession,” followed by “establishing a larger presence on statewide policy issues” and “educating and updating members on legislative advocacy issues.”

The strategic planning process resulted in the identification of several overarching organizational goals: • Elevate the profile of the NJCPA and its leadership as an objective go-to

source for the media and stakeholders on business, tax and economic issues.

• Establish the NJCPA as a significant thought leader and sought-after stakeholder in the state.

• Build an advocacy infrastructure that supports an impactful legislative agenda around key policies that affect the profession in the state.

• Increase member engagement, leading to greater grassroots activism and ability to rally members around NJCPA public policy priorities.

During the 2016/17 year, the NJCPA will increase its advocacy in collaborative efforts with the New Jersey Business and Industry Association (NJBIA) and the New Jersey State Chamber of Commerce.

The plan’s second year will continue to build on the new activities established in year one as well as prepare for the significant changes expected with the November 2017 New Jersey gubernatorial and legislative elections.

Due to those races, combined with a lame duck administration, 2017/18 will feature a healthy debate on the future of New Jersey, but it will also likely feature gridlock, with partisan positioning in the legislature. The NJCPA will attempt to establish relationships with key members of the new administration and legislature who take office in January 2018.

By the middle of 2018, New Jersey will have transitioned to a new administration, likely resulting in significant personnel turnover and transitioning across all levels of state government, along with the development of new statewide initiatives and priorities.

The NJCPA strategic plan also contains opportunities for all sectors of the membership to engage in meaningful advocacy activity through grassroots action, events with

lawmakers, and participation in new advocacy-related committees.

“We understand that our positions may not always generate universal agreement among our members. In an organization as large and diverse as ours, unanimity on complex issues is not possible,” Thomas said. “However, we thoroughly vet our positions with NJCPA leadership, and, whenever possible, we conduct member surveys to get a pulse read on member sentiment.

Ultimately, we believe that advocating pro-business policies, which promote economic growth, is in the best interests of all New Jerseyans.”

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Learn more about the NJCPA’s advocacy initiatives at njcpa.org/advocacy.

2016/17 Board of Trustees EXECUTIVE COMMITTEE President – Walter J. Brasch, CPA President-Elect – Edward I. Guttenplan, CPA Secretary – Michael VanderGoot, CPA, CGMA Treasurer – Lynn L. Albala, CPA Immediate Past President – Frank R. Boutillette, CPA CEO & Executive Director – Ralph Thomas, CGMA TRUSTEES Jean I. Abbott, CPA Amy Y. Both, CPA Robert J. Brown Jr., CPA Melanie A. Cobb, CPA Carol Donatiello Iocca, CPA Sarah Krom, CPA Roy H. Kvalo, CPA Stephen O. Richard, CPA William J. Ryan III, CPA Kyle M. Sell, CPA Audrey J. Sherrick, CPA Lorenzo T. Vanore, CPA

The Younger CPA Firm Traditionally, accountants have been seen as boring stuffed suits worried only about “the numbers.” But with the influx of younger accounting professionals forming their own full-service CPA firms before the age of 40, those perceptions are quickly changing.

By David A. Lopez, CPA David A. Lopez and Company LLC

In 2003, at the age of 32, I opened my practice with the mindset that we were not going to be “your parents’ accountants.” As a practice made up of younger CPAs, we saw ourselves as businesspeople, not just accountants.

We aspired to be a resource in every aspect of our clients’ businesses. And as we grew, it proved to be the cornerstone of our success.

Fast forward to 2016: The firm is still young. The oldest accountant in our practice is 46 years old. We use our younger ages and mindsets as an advantage, even as a marketing tool. I will highlight three ways a firm owned and managed by younger professionals approaches client service and the establishment of a dynamic culture.

We Are More Than Just Number Crunchers

I mentioned earlier that we consider ourselves businesspeople who happen to be CPAs. When I tell people that I

am a CPA, usually the first thing out of their mouths is, “So, you do taxes?”

The general public still views CPAs as tax preparers. Internally, we work hard to dispel that notion by explaining that the new accountant does more than tax returns. We actively pursue businesses and individuals who want to work with us throughout the year. Our practice has only a few “tax-time” clients we see once a year; we have contact with the majority of our clients on a monthly basis. We have adopted this approach because today’s entrepreneurs often look for an accountant who can provide a myriad of services. Business owners become frustrated when they hear that an accountant only prepares taxes or can come in no more than quarterly.

Younger CPA firms look to alleviate that frustration by building practices that can provide high-quality, comprehensive services to their clients on a regular basis. For example, within our firm, we have a mix of professionals who have degrees in various disciplines.

This allows us to provide a catalog of services that are diverse but in line with our core CPA principles. We have the skills and experience to provide not only tax and accounting services for our clients but also process payroll, manage their customer relations and build new business segments. These types of services extend well beyond what are

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considered traditional accounting firm services. It helps us work with clients on at least a monthly basis, thus increasing fees and providing a steady cash flow.

We Not Only Use Technology, We Embrace It In our firm’s 13 years of existence, the manner in which business is conducted has changed tremendously.

Technology has been a driving force behind these changes. Most firms use technology on a daily basis, but many older firms still see it as a necessary evil. Younger firms tend to embrace technology and implement its use more effectively than our more mature counterparts.

Younger professionals do not know a world without technology, so technology tends to play a major part in the client service plan. For example, face-to-face meetings have been replaced by web-based meetings and video link-ups, text messages are replacing emails, Google calendars allow clients to set meeting dates and

times, and social media provides free marketing and visibility.

In addition to client service applications, technology is essential to business development. Understanding and embracing technology provides CPAs with the tools needed to work on a national and even global level.

It allows us to meet our potential and existing clients “where they are.” Even though personal contact is important, younger professionals see video meetings as an efficient and effective way to make initial contact, thereby extending reach to other regions without the expense of travel.

Our Culture Is Professional But Relaxed and Inclusive

One of the most enjoyable aspects of a younger CPA practice is the firm’s dynamic culture. My entire career has been in public accounting. Starting at a local firm, then moving to a regional one, and finally concluding my employee career at a national firm, I have seen the traditional culture at each

level of the firm pyramid. One common characteristic was that the culture was overly structured and inflexible.

In addition, only upper-level staff members were encouraged to take part in the firm’s overall operation.

Younger firms have seemed to change that dynamic. Our firm is built using the traditional model of professional levels, such as staff, senior manager and partner, but the roles and responsibilities of each level are very flexible. Younger firms tend to greatly reduce firm policies and procedures.

Of course, we do not totally disregard structure. Our system of engagement review, quality control, and regulatory and professional compliance assurance is top-notch. But we do not get handcuffed by an overload of policies and procedures that limit employee individuality and enthusiasm.

Younger firms tend to encourage all levels of personnel to take an active role in the firm’s operation and growth. We cultivate our talent to be leaders and expect them to build relationships with our clients. I have observed that in older firms, the staff’s interaction with clients is suppressed. We train our people to be there every step of the way, even if to simply observe how client meetings are conducted. Giving staff members a sense of ownership reduces turnover and promotes longevity within the practice, which makes us all winners.

When younger firms are compared to firms managed by professionals in their 50s and 60s, the differences are easily noticed. Being different doesn’t make one better than the other, but those differences highlight how our profession is evolving and how we need to keep pace with the youth movement in other industries if we want to remain the trusted advisor.

David A. Lopez, CPA, is managing director of David A. Lopez and Company LLC. He is a member of the NJCPA Content Advisory Board and can be reached at dlopez@ davidlopezcpa.com and on Twitter at @davidlopezcpa.

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The New

Retirement It used to be that retirement was a very short period in one’s life. When Social Security was put into place, the general idea was that people would work until 65, collect Social Security benefits for two years and then die.

By Michael R. Steiner, CPA RegentAtlantic Capital LLC

That may sound morbid, but that was the actuarial thinking during the first half of the 20th century.

Today, retirement is a whole new frontier. Thanks to advances in medicine and burgeoning wealth in the U.S., people are living longer — 70 is the new 60, 60 is the new 50, and so on. The trend of longer and more active lifestyles is expected to continue, and as retirements in many instances are lasting 25–30 years or more, retirees have more options for how to spend that time.

Retirement is no longer milling around the senior center, playing bridge and eating dinner at 4 p.m. So what does retirement mean today? A quick Google search of the term pulls up the following definition: “The action or fact of leaving one’s job and ceasing to work.” But today’s retirees are challenging this standard textbook definition.

Fulfillment in retirement now comes in many forms, unique to every individual. Maybe that includes travel, volunteering, and a lot of tennis and

golf. Many retirees today are choosing to carry their careers over into their retirement years, either as consultants or even continuing to work full time.

Waking up every morning to go to work simply because they want to is a desirable mode of retirement for some.

The increased number of forms that retirement can take is broadening the notion of retirement, making financial independence and planning ahead for these later years even more imperative.

What’s more, there are now entire living communities centered on retirees, designed for their lifestyles and needs, both personal and medical.

Life planning communities (formerly known as continuing care retirement communities) and 55-and-over communities are sprouting up left and right, designed to offer activities and community for retirees. This is a whole new frontier for retirees and represents a trend that is expected to continue as more and more baby boomers enter retirement over the next two decades.

Retirement planning in today’s environment should be centered on three equally important areas: activity, health and finances.

1. Activity refers to how you plan to spend your time. Is it golf or the opera? Florida or Maine? Working as a part-time consultant or painting portraits in the park? Whatever the

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activities are that fuel your enjoyment and make you feel complete, they need to be dreamed up in advance of your final exit from the workforce. Often, new retirees don’t contemplate this aspect of their retirement in advance, so when that day comes, they quickly get bored and anxious. Those who have not adequately mapped out what they plan to do once they retire often find themselves going back to work simply out of the desire for a daily routine, when they might actually be happier spending their time elsewhere.

2. The second consideration is health.

There is an old saying that “when you have your health, you have everything.”

While there are always circumstances beyond your control, there is much that you can do to position yourself for an enjoyable and extended retirement.

This is not intended to be a lecture on nutrition and exercise — just a reminder of the importance of personal and medical care in experiencing retirement to its fullest extent.

3. The last and most highly focused upon area of concentration is finances. This is the one that keeps

most people up at night. Why is that? It’s because people fear running out of money and not having the opportunity and/or ability to return to work to make more. But with proper planning, you can alleviate this fear.

There are two concepts to keep in mind when contemplating financial retirement planning. The first is that it’s never too early to start planning for retirement. The earlier you develop sound saving and spending habits, the more likely your retirement objectives can be met later on. The second concept is that a late plan is better than no plan at all! It may just require more compromises.

A retirement financial plan should take into account your current financial position; expected income, such as pensions and Social Security benefits; and future recurring and one-time expenses, such as basic living needs and the purchase of a second home. The engine that drives the plan is the rate of return, more importantly, the real rate of return: This is the return an investor achieves after taking inflation into account. Ultimately, what

you should be most concerned about is maintaining a consistent spending level and staying ahead of inflation.

The markets will move up, down and sideways, but as long as purchasing power remains intact and just ahead of inflation over the long term, what happens in the stock market from day to day won’t affect your financial independence.

In retirement planning, like in all aspects of life, there are some things you can control and others that you cannot. To achieve a fulfilling retirement, you should focus your planning on what you can control. That includes how you’ll choose to spend your time; how you’ll care for your health and nutrition; and how, when and from where you’ll expend funds.

These are the keys to long-term success in today’s new retirement.

Michael R. Steiner, CPA, CFP, is a managing partner and wealth advisor at RegentAtlantic Capital LLC. He is a member of the NJCPA Content Advisory Board and can be reached at msteiner@regentatlantic.com.

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The CPA

Migration What Got You Here Won’t Get You There The CPA profession is undergoing a radical transformation. That much appears to be widely agreed upon. The shift is discussed at every conference event at local, state and national levels.

By Sean Stein Smith, CPA Rutgers University

Words like disruption and innovation are working their ways into the accounting conversation to a degree that we didn’t see previously, and this shift will undoubtedly have profound effects on the profession.

Whether accountants are employed in public practice, consulting, industry or research/academia, the proverbial handwriting is on the wall. Simply stating that dramatic changes are coming to the profession is not enough.

To effectively adapt to and embrace the coming changes, it is important for the profession to be able to identify areas and competencies that will serve the profession well moving forward.

Areas of Growth

There are several broad areas in the business landscape that appear to be growing and/or changing at an increasing rate of speed — nontraditional reporting, integrating fraud and forensic accounting on a continuous basis, and the growing convergence of accounting and information technology. While there are certainly dramatic changes occurring in specific fields, like finance and healthcare, this article focuses on changes in the business environment

that require CPAs to adapt, regardless of the specific industry.

Since the financial crisis in 2007/08, there has been a trend among different stakeholder groups to report increasing amounts of information. Sustainability reporting, information and reporting on corporate governance, and integrated financial reporting are proliferating in the marketplace. Organizations must be able to produce the necessary information to meet these reporting requirements. Of particular importance to accounting is the fact that in order to accurately report this information, one must develop metrics, reporting frameworks and templates. CPAs and the accounting profession are well positioned to leverage existing competencies to fill this market need.

Fraud and forensics, as it relates to both financial and nonfinancial factors, is a critical field of growing importance. Scandals such as the one that recently occurred at Volkswagen illustrate that improvement is still important in quantifying and building data systems and processes.

As organizations grow increasingly more complex and international in scope, there is an increasing need to develop systems, checks and balances, and processes to prevent, detect and investigate irregularities in activity. Embedding forensic tools and preventive items into routine processes and report generation is an important step. It is always cheaper to spot and fix problems internally before they become larger and affect customers, clients and other stakeholders.

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The rapid advancements in technology continue to radically redefine the business landscape.

Industry and competitive boundaries continue to blur and, in some cases, disappear entirely. Specific to the accounting field, the ramifications of the growing reach and scope of technology are felt in a quantifiable way. Accounting professionals — whether they are employed in public practice, private industry or consultative roles — are frequently tasked with partnering in technology projects. Increasingly included on the CPA to-do list are assisting with the implementation of a new enterprise resource planning system, testing new submodules, providing input throughout the assessment and design phase of new systems and reporting initiatives, and in some cases playing a lead role in the configuration and preliminary testing of those systems.

Technology will not become less important as time progresses; rather, technology will continue to impact the profession. CPAs have to be prepared to adapt to these changes.

Skills Set of the Future

The accounting field has evolved far beyond merely tracking debits and credits, even beyond preparing financial statements. Organizations, and the way business is conducted, have evolved and changed dramatically. It is important that accounting professionals have the skills to keep pace and remain relevant to the business decision-making process. Drilling down specifically to the three growth areas mentioned, there are specific skills and competencies that should be developed to take advantage of these opportunities.

The foundation of the accounting and finance fields is clearly quantitative analysis, but the expectations of accounting professionals are changing.

In addition to expertise on generally accepted accounting principles (GAAP) and international financial reporting standards (IFRS), the abilities to perform data analytics and present the results of analytic

testing are increasingly relevant to CPAs. Whether it is a matter of simply running regressions or more complicated software packages laid on top of existing reports, decision makers require quantitative information that is understandable and relevant. With the need to report increasing amounts of quantitative data, ranging from social media statistics to operational figures on electricity consumption, comes the need for improved, more sophisticated communication skills.

As anyone who has ever witnessed a poorly delivered presentation can attest, the best information and data in the world lose their relevance and impact if not communicated clearly.

Accounting professionals are not usually known as great orators or writers, but to be involved in the decision-making process, they must be able to articulate and defend their analyses and subsequent positions. In addition to verbal communication, the ability to write effectively is an important skill that is all too often lacking among CPAs. They must eliminate the jargon and focus on linking what they are saying to what

the client or manager is trying to discover, address and answer.

Perhaps the most important skill CPAs will need moving forward is adaptability. This is not to say that the fundamentals of the profession will change in dramatic ways, as debits are still on the left and credits are still on the right. Rather, what this means is that in a business environment that is continuously evolving, CPAs must also continuously evolve. The areas of growth and associated skills identified here are just a small sample of the dynamic changes occurring within the broader business landscape. The biggest takeaway for CPAs going forward is that, as a profession, seeing and understanding that big picture is more important than ever.

Sean Stein Smith, CPA, DBA, CMA, CGMA, CFE, is an assistant professor at Rutgers University. He is a member of the NJCPA Content Advisory Board, Student Programs & Scholarship Committee, Young CPAs Council, and Nonprofit Interest Group. He can be reached at drseansteinsmith@gmail.com.

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Technology’s Impact on the CPA’s Role

Technology is having a tremendous, multifaceted impact on the CPA’s role.

By Robert Risk Wiss & Company

CPAs have always been their clients’ trusted advisors when it comes to tax, audit and accounting services.

With the evolution of technology, a new trend over the last five years, inside CPA firms of all sizes, has been the growth of advisory services — delivering products and services using the cloud.

Today, 25 percent of people who work for CPA firms are not CPAs; they work in advisory services. “Client advisory services powered by the cloud are now firmly established as a growth opportunity in the accounting profession, with leading firms finding innovative ways to serve clients and differentiate themselves in the marketplace.”1 CPAs have invariably handled clients’ finances and taxes, which entails a high degree of trust and an expectation of professionalism and confidentiality. As trusted business advisors, CPAs can reach beyond these boundaries that for years have been seen as the extent of the CPA role. By working with their clients to recommend new sources of

revenue and technology solutions, CPAs are able to find ways to strategically plan for actions that notably improve clients’ business operations and marketing activities. Today’s CPA needs to surpass the role of financial confidante and act as a partner the business owner can consult on a wide range of issues.

More clients are calling on their CPA firms to advise them on security concerns, software selection and implementation, cloud services, new technologies, and other ways to make their businesses run more efficiently.

The growth of the internet and cloud services has allowed clients to extend their reach and market their companies across the country and even the globe. The broad array of services and software being offered on a cloud platform has freed clients from expensive business entry points that required large initial capital outlays in infrastructure and hardware. Thus, it is no surprise that clients are asking CPAs to have expertise in these areas to help guide them in their business decision process.

The profound evolution of information technology continues to astonish CPAs with novel ways to interpret data. Because of this progress,

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CPAs are pushed to acquire different professional skills, which have been incorporated into their day-to-day operations. At the same time, many services that were required before accounting computer programs, such as manual configuring of entries, have been progressively amended — reducing the margin of error. Tablets, smartphones and other mobile devices will become the chief tools to manage accounting workloads and client services. These assets permit for more flexibility when CPAs are completing numerous projects for clients.

The journey to a digital business is not an easy one. A lot of preparation is needed before a firm dives into the process of transforming into a technological dominion. However, once businesses confront this change, they can better compete in today’s dynamic marketplace. To best serve their clients, CPAs need to embrace these new resources promptly, finding the soundest way to assimilate the changes into their practice and actively pilot their clients through the adoption.

These enhancements will transfer the emphasis of accounting from calculation to consulting, spawning new methods to analyze data, make helpful decisions and offer tactical advice to clients.

Congruently, technology is changing the traditional core services CPA firms offer their clients. Take auditing services, for example. In the next five years or so, the ancient method of performing compilations, reviews and audits is going to drastically revolutionize, as the first steps of the “continuous audit” begin to take shape.

Validis, a new company from the United Kingdom, is in the process of redefining how CPAs obtain their information from clients. Validis automates audit preparation. Therefore, CPAs will no longer be pressed to send teams out to the client’s site to gather information and bring it back to the office. Correspondingly, CPAs will no longer need to map their clients’ data into the templates their firms use to generate work papers.

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At the push of a button, Validis will connect via the cloud to the client’s accounting system and fetch all needed information, at the transaction level, to its cloud-based system. Within a few minutes of receiving the client’s data, Validis will automatically map the client’s transactional data into Validis’ standard data templates and generate 85–90 percent of the AICPA-format work papers. CPAs can deliver these work papers in a zip file and easily copy them into a firm’s engagement system. All data are encrypted for transmission and secure on Validis’ cloud platform.

The accounting industry is adopting a modernistic language of business: It is the dialect of forthcoming generations of bookkeeping specialists. The fruition of accounting technology has continued to show strong growth potential for the future. These expansions have renovated

the industry, launching it to novel levels of opportunity. Technology is not only changing the services CPA firms offer and the way core services are performed — it’s changing the way clients view CPAs as their trusted advisors.

Robert Risk is director of technical advisory services at Wiss & Company.

He can be reached at rrisk@wiss.com or 973-994-9400.

CPA.com, “Expanded Focus on Training and New Solutions in Client Advisory Services, CPA.com CEO Says,” news release, Dec. 8, 2015, cpa.com/press-releases/expanded-focustraining-and-new-solutions-clientadvisory-services-cpacom-ceo-says.

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A&A

buzz

NFP Financial Statement Changes on the Horizon B Y R ICH ARD A. RIBE I RO, PK F O ’ C O NNO R DAVI E S L L P

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inancial statement reporting for not-for-profit entities (NFPs) has not changed significantly in more than two decades. In 2015, however, the Financial Accounting Standards Board (FASB) completed, and issued for public comment, proposed changes meant to improve NFP financial statement reporting and disclosures.

FASB’s intent was to update, not overhaul, current reporting requirements to enable organizations to better “tell their financial story.”

FASB’s proposed changes were not widely accepted, however. As a result of the feedback FASB received from stakeholders and other users of NFP financial statements, FASB redeliberated and will implement the changes, with some modifications, in two phases.

Phase I

Phase I will include the changes listed

Area of Focus

in the table below. FASB expects to release a final Accounting Standards Update for Phase I by the third quarter of 2016, with an effective date for calendar year 2018 and fiscal years ending in 2019. Early adoption is permitted with some exceptions.

Phase II

Phase II includes proposed changes that will need more time to resolve, involve consideration of alternatives suggested by stakeholders that the FASB did not previously consider, or are related to similar issues being addressed in other projects. These proposals consist of: Operating measures, including • Whether to require intermediate measure(s).

• Whether and how to define such measure(s), and what items should or should not be included in the measure(s).

• Alternative disaggregation approaches suggested by stakeholders.

Statement of cash flows, including realignment of certain line items on the statement of cash flows (operating vs. financing vs. investing), specifically: • Purchases, sales and contributions restricted for the purchase of longlived assets would be reported as operating cash flows (no longer as investing cash flows).

• Interest expense payments would be reported as financing cash flows (no longer as operating cash flows).

• Interest and dividend income received from investments other than program-related investments would be reported as investing cash flows (no longer as operating cash flows).

Richard A. Ribeiro is an audit manager in the not-for-profit group of PKF O’Connor Davies LLP. He can be reached at rribeiro@odpkf.com.

Phase 1 Change

Current GAAP

Two classes of net assets: • Without donor restrictions • With donor restrictions Amounts representing underwater endowments are to be reflected in net assets with donor restrictions.

Gifts of cash restricted for the purchase or construction of property, plant and equipment must be released to net assets without donor restriction on the placed-in-service date. Time restriction option is eliminated.

Three classes of net assets: 1. Unrestricted 2. Temporarily restricted 3. Permanently restricted Balances representing underwater amounts are included in unrestricted net assets.

Investment return

Present investment return net of direct and external investment expenses is required on the statement of activities. Disclosure in the notes of investment return components, including expenses, is no longer required.

Present investment return components, including investment expenses, are required on the statement of activities or in the note disclosures.

Statement of functional expenses

Statement is required either on the face of the financial statements or in the note disclosures.

Statement is required only for voluntary health and welfare organizations.

Net assets

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12

Area of Focus

Cash flows

Financial statement note disclosures

Phase 1 Change

A choice of indirect or direct method is allowed. If direct method is used, reconciliation of cash flows from operations is no longer required.

Current GAAP

Use of indirect method is acceptable.

Enhanced in the areas of: • Board-designated funds, including the amount, purpose and type of board designations.

• Composition of donor-restricted net assets, including the nature and amount of donor restrictions.

• Liquidity management and use of resources, including qualitative information on how the organization determines its liquidity risk and identifies available liquid Optional resources, and quantitative information about financial assets that are available to meet cash needs for general expenditures within one year of the balance sheet date.

• Methods used to allocate costs between program and support functions.

• Underwater endowment funds, including the aggregate original gift amounts, current fair value, and the board policy regarding appropriation from such funds.

• Slight improvements to disclosures for organizations that use an operating measure, including board appropriations, designations and other transfers.

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Then call 215-885-7510 or email bjohnson@capstantax.com N E W J E R S E Y C P A • S E P T E M B E R • O C TO B E R 2 0 1 6

13

BEST

practices

Continuous Recruiting B Y JO S EPH A. TARASC O, C PA, AC C O U NTANTS ADVI S O RY G RO U P L L P

A

talent acquisition war is taking place in the accounting profession, and it is far from over. Competition for staff resources has intensified due to growth plans and a shortage of quality professionals. At the same time, it has become increasingly difficult to meet the challenges of baby boomer partner retirements. (The oldest baby boomers are now 70 years old.)

Firms seeking to recruit quality professionals now compete on a dynamic, fast-paced “battlefield” using social media. At the same time, changing views on careers in public accounting are causing more staff defections to private accounting positions. Faced with a scarcity of highly skilled staff members and rapidly increasing client and market demands, it is likely that a significant number of firms will be forced to merge, unless they adapt quickly and change how they recruit personnel.

Most managing partners understand that a firm’s growth plans and internal succession strategies rely heavily on continuously attracting highly talented professionals. The time to react to this marketplace crisis has become significantly shorter than in the past, especially for succession-challenged firms.

The Game Has Changed

The recruiting game has permanently changed. “Just in time” recruiting is no longer a practical and sustainable option for managing an accounting firm. Many firms receive resumes for openings but are frustrated to find, after interviewing the candidates, that many of them do not meet the job requirements. Extended open vacancies can be costly and have a significant negative impact on a firm, the partners, the clients and the staff’s morale. To avoid these issues, firms should continuously recruit. Although

this strategy may defy traditional approaches to recruiting and related profitability, it can make a firm less vulnerable to turnover. This approach can also help firms meet the challenges of servicing new clients and retaining current clients.

A Contemporary Approach to Recruiting

Continuous recruiting means constantly researching qualified candidates who are most likely not seeking a new position but are willing to meet and discuss the possibility of joining the firm in the future. Once a candidate has been contacted, a partner or manager should be assigned the task of building the relationship with the candidate over an extended period of time.

Recruiting has to be a continuous process to win the war for talent. It is no longer a cost-effective strategy or a viable option to wait until there is an open position or for new engagements before starting a search and beginning the recruiting process. Quality professionals are rare and most likely have a well-paying position at a good firm, so it will take time to “sell” them.

Firms must be prepared to add staff for actual or anticipated growth.

This contemporary approach to recruiting mandates building a pipeline of qualified candidates who can quickly fill vacancies. Having a pool of talented potential candidates can prevent firms from making hiring mistakes caused by feeling rushed to fill an open position. “At most companies, people spend 2 percent of their time recruiting and the rest of their time managing their recruiting mistakes,” says Richard Fairbank, CEO at Capital One. The focus of continuous recruiting should be on building and nurturing

long-term relationships with the right qualified candidates. This is the same method marketing and business development professionals use to target, identify, contact and build relationships with potential new clients.

Developing a pipeline of candidates can be accomplished using the following sources: • Social media channels such as LinkedIn, Facebook and online job websites (e.g., ZipRecruiter).

• Current staff and alumni.

• Other business colleagues, such as attorneys and bankers.

• Traditional recruiters.

• The Careers section of the accounting firm’s website.

• State CPA societies and professional organizations.

Continuous recruiting, and building a talent pipeline, allows a firm to take greater control of the recruitment process instead of starting from scratch every time there is a vacancy or new large engagement to service. The old recruiting model doesn’t work anymore, and the time to change is now. As Charles Darwin said, “It is not the strongest of the species that survives, not the most intelligent, but the one most responsive to change.”

Joseph A. Tarasco, CPA, is the president of Accountants Advisory Group LLP. He is a member of the NJCPA Content Advisory Board and can be reached at joe@accountantsadvisory.com.

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14

CORPORATE

finance

Reverse IPOs: A Potentially Quicker Route to a Public Listing B Y D EREK S TEINHIS E R, C PA, E RNST & YO U NG LLP

F

or private businesses that want to go public but are put off by the high cost and long time frame of a traditional initial public offering (IPO), a reverse IPO can be an attractive alternative.

But, as with any such transformational transaction, reverse IPOs come with a combination of benefits and risks that should be carefully considered.

Despite being a well-established and well-trodden route to a public listing, reverse IPOs are not as widely known as traditional IPOs. Perhaps the main reason is that reverse IPOs have a very different route to market than a traditional IPO, which often results in less publicity.

What Is a Reverse IPO?

In a reverse IPO, a private company merges into an existing public company registered with the Securities and Exchange Commission (SEC).

While that may sound like an acquisition, in a reverse IPO, the existing public company is usually either: • A shell corporation — a company with limited or no net assets, or • A special-purpose acquisition company — a company created specifically to undergo an IPO to generate capital for an acquisition it commits to completing within a limited period of time (normally two years).

Reverse IPOs are structured in such a way that the private company’s shareholders receive enough shares in the public company and seats on its board to effectively result in the private business becoming a publicly traded company.

Why Do Companies Choose a Reverse IPO? From start to finish, a traditional IPO is an extremely time-consuming and costly process. Among other tasks, a

company going through an IPO must register with the SEC, go through underwriter diligence and complete a road show. The entire process generally takes six to nine months. A reverse IPO can accelerate the process by which a private company gains access to capital and liquidity, by turning it into a public company in as little as one to three months.

The lower costs and shorter time frame make a reverse IPO an attractive option for: • Companies that want to go public but cannot afford the significant fees involved with a traditional IPO, such as those for bankers, lawyers and accountants.

• Companies that want to go public in a short time frame, for strategic reasons.

• Companies that need more certainty than that offered by other potential sources of funding, such as venture capital, private equity or strategic buyers.

What Are the Risks and Requirements?

A private company undertaking a reverse IPO will still have to carry out a robust due diligence process. It will need to understand the legal and capital structure of the public company it is merging with, including the company’s shareholder pool and net assets — which the private company will effectively be assuming.

Additionally, because it is going public, the company going through a reverse IPO will need to: • Produce audited financial statements, including public company disclosures.

• Establish independent governance of boards and committees.

• Maintain robust internal controls over financial reporting. (The

company’s management team must be able to certify the effectiveness of these controls and must, generally upon its second Form 10-K filing, include the opinion of the auditors on them.)

• Deal with a number of potentially challenging technical accounting and tax considerations.

Many private companies will not be able to meet these requirements in the short time frame of a reverse IPO. So they must create the infrastructure and capabilities required to act as a public company before they begin the reverse IPO process. That preparation may seem onerous, but there is no totally pain-free route to going public. And for companies that prepare fully, a reverse IPO can result in substantial savings in both time and money.

Derek Steinhiser, CPA, is an Ernst & Young LLP financial accounting and advisory services (FAAS) partner and the Northeast IPO leader. He also leads the Northeast region’s divestiture service offering for FAAS. He can be reached at derek.steinhiser@ey.com. The views expressed are those of the author and not necessarily those of Ernst & Young LLP.

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15

FINANCIAL

planning

Retirement Accounts: New Rule Requires Disclosures, Fiduciary Responsibility B Y GUY MCPH AIL , C PA, T HE GM C PA GRO U P, PC

I

n April, a new investment rule was passed that requires brokers to act in the best interests of their clients in regard to retirement accounts. This new fiduciary standard will force brokers to start doing what’s best for clients instead of looking out for themselves.

The new law was passed to even out the playing field between brokers and registered investment advisers: The latter were already required by law to act in their clients’ best interests.

The rule, which takes effect in April 2017 and is to be fully implemented by January 2018, will also require brokers to clearly and prominently disclose any conflicts of interest, like hidden fees or kickbacks often buried in fine print.

Brokers have been working under a law where their own interests could come first; investments for a client needed only to be “suitable.” For example, a broker may have told a client to roll over his 401(k) into an IRA with expensive mutual funds and commissions, giving the broker a nice kickback at the expense of the client. Individuals investing in IRAs have been hit hard by excessive broker fees.

The White House Council of Economic Advisers estimated that amount to be around $17 billion per year!

The new rule follows a major trend since the mid-1970s, when the United States’ private retirement system started moving away from defined benefit plans and into self-directed IRAs. This trend, coupled with the historically low rate of interest people are receiving on their savings today, makes getting solid investment advice critical.

“Sometimes government works for the people, and today was one of those days,” said Sen. Elizabeth Warren when the regulation was passed. Sen. Warren, who has been an ardent supporter

of the regulation, said the new rule’s benefits are already being felt by investors, noting that some financial companies have started lowering their fees in anticipation.

However, the final version of the regulation includes a number of modifications that reflect the intense lobbying by the financial industry since the regulation was first proposed six years ago. Many in the brokerage community have said the Labor Department made a lot of concessions, including giving firms more time to comply and grandfathering in existing investments.

The public is largely unaware of the complexity of these laws and that different types of financial advisers work under different rules. The terms used in the financial industry are confusing to consumers. For example, the terms “fee-only” and “fee-based” sound similar, but one compensation model does not allow a financial planner to receive commissions while the other does. Clients deserve to know the difference so they

can choose the model they deem appropriate for their situation.

Given that the public has a high respect for the CPA profession, CPAs should educate themselves on these investment standards if they haven’t already done so. CPAs can help guide their clients to work with advisers that fall under the fiduciary standard, not just for retirement accounts but for all of their money.

There are CPAs who refer back and forth to investment advisers. Are those CPAs referring those investment advisers because they work and abide by the fiduciary standard, or is it to get more referrals? Now may be a good time to become more proactive in educating your clients on issues that affect their financial future.

Guy McPhail, CPA/PFS, CFP, is president of The GM CPA Group, PC and a registered investment adviser. He is a member of the NJCPA Content Advisory Board and can be reached at gmcphail@ njbizcpa.com.

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16

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FORENSIC

file

Collaborative Divorce: CPAs Play a Significant Role in the Newest Form of Alternative Dispute Resolution B Y MEGAN A. S ARTO R , C PA, SAX LLP

I

n New Jersey, there are four official ways to get divorced: litigation, arbitration, mediation or, the newest vehicle, collaboration. On Sept. 10, 2014, Gov. Chris Christie signed the New Jersey Family Collaborative Law Act to legitimize the practice of collaboration in matrimonial matters.

The collaborative process, as described by law, is a type of alternative dispute resolution wherein an attorney is retained for the limited purpose of assisting his or her client in resolving family disputes in a voluntary, nonadversarial manner, without court intervention.

The collaborative process identifies the specific goals and interests of both parties and aims to find a happy medium through open communication and a pledge to not go to court. In addition to developing these objectives, the process includes gathering information, generating professional opinions, testing options and choosing solutions. The collaborative process generally ends when there is either a signed settlement agreement or a termination of the process.

Before collaboration can begin, both spouses are required to sign a “participation agreement” that states, among other things, that the divorcing spouses are committed to resolving the dispute through the collaborative process. The agreement must also identify the lawyers participating in the process and stipulate that those same lawyers (and their firms) will not continue to represent the parties if the dispute is submitted into court for any reason other than the submission of a settlement agreement.

The New Jersey Family Collaborative Law Act extends the privilege of confidentiality to all members of the collaborative team, which means that the confidentiality of the divorce proceedings cannot be breached without the permission of the clients.

The collaborative team consists not only of the divorcing spouses and their respective attorneys but also a mental health professional and financial expert, such as an accountant or financial planner. As the name suggests, the attorneys “collaborate” as colleagues instead of adversaries, while still providing individualized legal counsel to their clients throughout the process.

The role of the mental health professional is to manage and minimize the emotions often associated with the divorce process. Since emotions can interfere with the ability to think logically and clearly, the nature of the collaboration process relies on keeping them in check. The mental health professional can also assist with issues and concerns involving the children affected by the separation.

The financial expert is an essential member of the collaborative team. He or she advises and assists the divorcing spouses in understanding and preparing the following: • Income analysis.

• Budgets, both current and prospective.

• Business valuations.

• Equitable and tax-friendly property distribution options.

• Calculation of the tax impact of alimony and support.

• Projections based on settlement

options, which help divorcing spouses understand what their financial worlds will look like in the years to come.

A main advantage of choosing collaboration is the flexibility it offers the divorcing spouses to work out their own agreements and come up with more creative solutions. Unlike the litigation process, which is at the mercy of the court and judges who select options from statutes and case law, the collaborative process allows individuals to play an integral role in structuring the agreement. It helps the divorcing spouses retain more control over the final divorce result.

Another benefit is the savings — both financial and personal. The collaborative process helps to minimize the costs of the divorce process by avoiding expensive litigation. It also results in savings of time, emotions and other personal investments by helping the parties develop a fair, sustainable agreement that meets both parties’ approval.

Spouses often enter into divorce proceedings feeling like two separate entities with opposing missions. The goal of collaboration is to bring them to a point of unification, satisfied with the separation agreement and confident that it represents the best interests of all members of their family.

Megan A. Sartor, CPA, ABV, CFF, is a senior manager with SAX LLP. She is the leader of the NJCPA Business Valuation Forensic Litigation Services Interest Group and is a member of the Student Programs and Scholarship Committee. Megan can be reached at msartor@saxllp.com.

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18

SMALL/SOLE

practitioner

You and Third-Party Verification B Y P ETER J. RENZULLI , C PA, B OO K K E E PE RS2 GO

T

he key to providing great client service and meeting the professional and legal requirements for third-party verification is understanding the real question and expected response from the client and third party. Requests by third parties are usually nonfinancial, attestation service or factual. The nature of the request dictates the fees and services to be provided. Clearly defining the scope of services will help to prevent falling into a trap of providing prohibited services, especially in response to second requests made by the third party. Clear communication, written agreements, and educating clients and third parties are at the heart of providing great client service and reducing risk to the firm.

Understanding the nature of the engagement is the starting point to risk management and compliance with professional standards. Third-party requests come in many forms; the form determines the level of service that should be provided. The easiest request is a question of fact. CPAs are always permitted to confirm a fact, such as “We have prepared the following years’ tax returns.” But beware: The third party may put a greater reliance on the factual statement than you intend. For example, the third party may believe that a prepared tax return is a statement of accuracy, which creates risk for the firm. When making a statement of fact, be sure to narrowly limit the statement to prevent any confusion.

Requests about the accuracy of financial statements or tax returns are true attestation engagements and should be conducted as such. Third parties sometimes provide letters to be signed to “save” the client money and avoid a proper attestation engagement. Be careful of these form letters as they may not meet professional standards.

Another common request is who owns the business: This appears

to be an accounting question, but, in fact, evidence of ownership is a legal question. The fact that a return includes self-employment income is insufficient proof of ownership.

Be cautious when addressing such questions — the answer is not as obvious as it appears.

Another legal question that a CPA is not allowed to answer concerns the solvency of a company. There is no legal or accounting agreement on the definition of solvency, and CPAs are not permitted to opine on such matters.

Nonfinancial confirmations can also cloud the third party’s understanding of a CPA’s attestation services, so take great care when addressing these issues.

Communicate with the client to more clearly define the scope of the request.

If the request is prohibited by the professional code of conduct, the CPA can help the client modify the request.

Usually, a detailed explanation of the code and suggestions regarding what is allowed result in a modified request by the third party. The danger with modifying the request is when the third party requests additional information as a follow-up. Many times the CPA does not realize that the second request is a prohibited service. Each third-party request should be separately evaluated to prevent this trap.

Many third-party verifications come on a standard form prepared by them.

Be wary of these forms as they are not designed by CPAs and omit key language, creating risk and misunderstanding.

Generally speaking, I recommend CPAs not fill in the third-party form but instead put “see attached” and use a firmprepared document.

There is no prohibition against verbal communication for thirdparty verifications. However, as with all engagements, it is not a good idea. Verbal communication about engagement scope and third-party

communications leads to confusion and increased risk for the firm. The third party can speak with the CPA, but that conversation should be followed up with a detailed letter confirming the understanding and stating clearly that only the content of the written communication can be relied upon.

The CPA and firm should have a set of procedures clearly defined to assist members of the firm plan, accept and bill for third-party verification services.

Many firms do not bill for these services! These services are full of risk and, done properly, take a great deal of time. Remember to have written engagement letters and to charge appropriately for the service.

For AICPA guidance on third-party verification letters, visit bit.ly/ VerificationLetters.

Peter J. Renzulli, CPA, is the president of Bookkeepers2Go. He is a member of the NJCPA Content Advisory Board and can be reached at renzulli@ bookkeepers2go.com.

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20

TAX

talk

A Look at the Presidential Candidates’ Tax Platforms B Y JO S EPH C . G RAFF, C PA, ROSS, ROSE NTHAL & C O. L L P

A

s the July 1 deadline for this article approached, the U.K. had voted for Brexit, the Democrats had staged a sit-in on the House floor and the economy continued to limp along.

Uncertainty is the order of the day.

Nonetheless, specific tax proposals have emerged from the presidential candidates, although the likelihood of their enactment remains one of the biggest uncertainties.

Revenue from corporate taxes is a major focus of both candidates and political parties. In 2015, the tax on corporate profits represented 11 percent of overall tax revenue, down from 30 percent in the 1950s. One priority of Mrs. Clinton is to stop corporate inversions and earnings stripping, both of which push corporate profits offshore into low-tax countries. On the other hand, she has not embraced a lower corporate tax rate here at home — instead pushing targeted tax credits for apprenticeships and profit-sharing with employees, while seeking a significant increase in the minimum wage.

Mr. Trump, like many Republicans, views the current corporate tax structure as anti-competitive in the global economy and as negatively impacting both consumers through higher prices and investors through double taxation. He favors slashing the 35 percent corporate tax rate to 15 percent, thereby eliminating the incentive to push income offshore. He suggests incentivizing repatriation of corporate earnings at a one-time rate of 10 percent.

Illustrating the diversity in the candidates’ plans, the Tax Policy Center in Washington estimates that under Mr. Trump’s plan, corporate tax revenue would plummet $1.9 trillion over 10 years, while under Mrs. Clinton’s plan,

it would increase by $136 billion over the same period.

For individuals, Mrs. Clinton proposes lengthening the holding period for long-term capital gains to six years, to attain her lowest rate of 24 percent (43.4 percent for investments held for less than two years), and eliminating the carried interest break for fund managers. She would roll back estate tax reforms to 2009 law, resetting the individual exemption at $3.5 million and increasing the top rate from 40 to 45 percent. She embraces the “Buffet Rule,” which ensures an overall effective tax rate of 30 percent on those making more than $1 million.

Rather than focusing on the wealthy, Mr. Trump takes a more populist approach by proposing to eliminate income tax for joint earnings under $50,000; simplifying the tax code with only four brackets that top out at 25 percent; maintaining current capital gain rates; eliminating the alternative minimum tax (AMT); and completely eliminating the estate tax. He proposes to scale back deductions by steeply increasing the limitation on itemized deductions and personal exemptions but commits to retaining deductions for mortgage interest and charitable contributions. He would also cap the deductibility of business interest expense and, like Clinton, would eliminate favorable tax treatment of carried interests.

Both candidates’ tax plans will be dead on arrival without buy-in from Congress. In late June, the House Republicans released their “Better Way” tax reform proposal, which has both similarities to and differences from the Trump plan. Of particular note to tax preparers: Both plans call for tax simplification, such that tax returns

for the middle class “will be simple enough to fit on a postcard.” Other similarities include lowering personal tax rates (33 percent top rate in the Congressional plan), repealing the AMT and estate tax, and preserving mortgage interest and charitable giving deductions. While capping the tax rate on corporate income at 20 percent and on partnership and S-corporation pass-through income at 25 percent, the Republican plan would eliminate interest deductions for businesses, including the real estate industry. On the other hand, unlimited, immediate expensing of everything from equipment to buildings would be permitted.

Democratic leaders lined up to oppose the GOP plan, with Ron Wyden, ranking Democrat on the Senate Finance Committee, acknowledging, “Few would disagree that we need a fresh set of simple rules.” While blasting the Republican plan, Democrats in Congress stood up and walked into their summer recess without having released a comprehensive proposal of their own.

Thus, the name calling and political dysfunction in Washington continues.

For an up-to-date analysis and links to the presidential candidates’ tax plans, visit njcpa.org/newjerseycpa/sepoct16.

Joseph C. Graff, CPA, MST, is managing partner of Ross, Rosenthal & Co. LLP. He is a member of the New Jersey Society of CPAs and can be reached at jgraff@ rossrosenthal.com.

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21

TECH

center

Document Retention Today B Y JAIME C AMPBEL L , C PA, TI E R O NE SE RVI C E S LLC

E

lectronic document retention has more dimensions than most professionals consider until suffering the pain caused by having a document system by patchwork rather than by design. Repercussions include wasting both time and money: overpaying for storage space, searching for files, dealing with duplicates and version conflicts, wading through ancient documents when only recent ones are needed, and losing documents.

Storage Creation

High-impact considerations include the cost of storage space, when and how to archive files, what is worth storing, and unification of and common practices in folder structure and file names.

If there is a cost for your storage space — be it gigabytes for electronic files, public storage units, or the opportunity cost of physical file cabinets in place of a desk for a billable practitioner — then you must consider the economics of what is worth saving and for how long.

Obviously compliance plays a factor, so be aware of requirements from the IRS and other compliance sources.

When transitioning to a paperless document retention system, many people wonder what types of documents need to be retained as hard copies. You need to keep less paper than you think. Most institutions are evolving and require fewer and fewer “original” documents. The traditional approach of “scan and shred everything that doesn’t have a raised seal” is even falling away, because a flat-paper notary seal is now in circulation by many banks.

Paramount in storage structure is the decision to create a unified practice for folder hierarchy and file-naming conventions. If the economics are such that you need to efficiently and methodically cull all documents from a

certain number of years ago, consider an entire folder hierarchy by year and then normal subdivisions within that structure. If you have an alternative way to pull out files which are no longer required to be stored, such as a tagging system and a program to extract those files, then the year-based hierarchy is not needed. File-naming conventions have a profound impact on efficiency, including how quickly someone can find the target file and whether there is confusion or clarity regarding which is the most recent version of a file.

risks — a system that addresses hardware, software and processes, such as an exit process for employees — is paramount to your ability to procure a document when needed and control when it’s no longer a part of your document storage system, both of which are at the heart of a document retention plan.

Retention Systems

Usage

Top decisions to be made include combining files and the existence of local files.

A best practice in document retention is the combination of multiple similar documents into a single file, such as a year’s worth of monthly bank statements, trend analyses, compliance forms or work papers. It can be unwieldy to have these documents in separate files. If the files are extracted or deleted annually for document retention policy purposes, it’s much more efficient to have them combined.

If you work in a team environment, especially one in which multiple people need to access the same files, it is imperative that no local copies of files are stored unless there is a local-cloud sync in place. Even in single-user or silo environments, if files are stored locally, then the risk of loss is significant unless the system is backed up frequently to an easy access, off-site location.

The storage location of files is important not only for ease of access but also for risk of loss, be it through a lost laptop or mobile device, corrupted computer, misappropriation of a device, or departed employee in an environment with a BYOD (bring your own device) policy. A system that minimizes those

Retention policy feature?

SharePoint

Yes

OneDrive

Yes

SmartVault

No

ShareFile

Yes, but only up to 2 years

Box

Yes

Dropbox

No

Local computer

No

Server

Yes

If you don’t want to organize all of your files in a year-based hierarchy but want an easy way to archive or remove files which no longer require retention, then you’ll need to use a system with a retention policy setting.

With a retention policy feature, you can set retention rules, including how long the retention period is and what to do with the folder when the retention period expires.

Jaime Campbell, CPA, MBA, CGMA, CTT, MCT, is the chief financial officer for Tier One Services LLC. She is a member of the NJCPA Content Advisory Board and Technology Interest Group.

Jaime can be contacted at jcampbellcpa@ tieroneservices.net.

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22

Program

SOCIETY

pages

Get Involved Your Volunteer Profile: Where NJCPA Volunteering Begins

the time commitment and eligibility requirements. Where will you best be able to contribute your particular skills and talents? Which opportunities will help you make progress on your personal or professional goals?

3. Make a match. Click the green “Add Opportunity” button to choose a volunteer opportunity that fits with your interests, availability and goals. You can also join interest groups and certain committees immediately. Click “Back to Opportunity Search” to return to your search results.

4. Review your interests. Click the green “My Volunteer Interests” button to see your choices. If you’ve ended up with more than five, you may want to pare it down a bit. You can always add new opportunities later.

5. Be prepared to get started. You will be contacted with more information about your selected interests and the timing of involvement.

As an NJCPA member, you can find a place to volunteer after you activate your volunteer profile. Go to njcpa.org/volunteer or click Give Back > Volunteer from the top of any page on the NJCPA website.

Whether you are just getting started as a volunteer or want to be an NJCPA leader, write articles, speak to students about a CPA career or connect with other members who love a business valuation as much as you do, you can find the perfect volunteer opportunity.

1. Find your ideal opportunity. Use the Search Opportunities box to find customized volunteer opportunities that match how you want to volunteer, your career stage, your volunteering goals, and your technical interest areas. You can even search for remote volunteering opportunities and short-term projects.

2. Determine fit. Your search results include a preview of what’s involved. Click on any opportunity for more information, including

Dental, Vision and Group Legal Arthur J. Gallagher & Co. provides dental insurance, vision insurance, and group legal and identity theft coverage.

Dental: There are two plan options available. Dental PPO offers members the flexibility to receive care from any licensed dentist; however, members who utilize a participating dentist receive the greatest value under the plan. Dental HMO offers no claim forms, no deductibles, and no annual maximums.

Vision: Benefits are available once yearly from the last date of service for vision exams, frames and lenses. There is an option for contact lenses in lieu of glasses and an allowance for laser vision correction.

Group Legal and Identity Theft: Members have access to a nationwide network of attorneys for free and discounted legal assistance, both by phone and face to face.

Manage Risk and Cover Costs With NJCPAApproved Insurance Services NJCPA members have access to a variety of insurance products and services to help cut costs, manage risk and achieve peace of mind.

Accountants’ Malpractice Insurance CAMICO Mutual Insurance Company and Arthur J. Gallagher & Co. Professional Liability are the preferred carrier and agent for accountants’ malpractice insurance. The program offers members the most competitive rates available, the broadest coverage form in the market, and the opportunity to receive dividends.

Car Insurance Plymouth Rock Assurance offers members a 15 percent discount on auto insurance.

Disability Income Protection, Life Insurance, Accidental Death and Dismemberment, Hospital Indemnity, Business Overhead Expense Coverage, and Long-Term Care USI Affinity provides NJCPA members with members-only rates on disability income protection, life insurance, accidental death and dismemberment, long-term care, hospital indemnity, and business overhead expense coverage.

Visit njcpa.org/marketplace to learn more about these insurance programs and other discounts available to NJCPA members.

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CLASSIFIEDS Mergers/Acquisitions Traphagen & Traphagen CPAs, a well-established firm in Bergen County with diverse client base and credentialed support staff is seeking small firms and sole practitioners for acquisition or merger. We are looking for firms ranging in size from $300K to $700K. This is an opportunity to align with a quality firm, while continuing to provide your clients with exceptional service.

To confidentially discuss this opportunity please email us at carolynn@tfgllc.com.

Parsippany, NJ. Three-partner CPA firm seeks retirement-minded practitioner to merge/acquire practice ranging from $100K and up. Please contact Carl Gutt, 973-451-0800 x22 or cgutt@dglcpa.com.

The Marchese Group, a father-son CPA firm in northern NJ, is looking for retirement-minded practitioners grossing up to $150,000 for buyout or merger. This is an opportunity to assure your clients will have exceptional quality service. Please contact ron@tmgcpa.net.

Seize a merger acquisition opportunity with benefits for you. We are looking for firms ranging from $300,000 to $5,000,000 eager to combine forces as we continue to grow across Northern NJ, Westchester and the Hudson Valley region. Goldstein Lieberman & Company is ideally situated to service all types of industries. Visit www. glcpas.com; email me, Phillip Goldstein, CPA, managing partner, philg@glcpas.com; or call me at 800-839-5767 to have a confidential conversation.

LLI Advisory Group, a Union County based firm is looking to expand its practice. If you are a retirement-minded practitioner with a practice grossing $300,000 to $800,000 or a sole proprietor looking for a firm to partner with, please contact Spiro Leunes at sleunes@llicpa. com or 908-358-0503. We are a young and entrepreneurial firm with a successful history of mergers and acquisitions.

Passaic County peer-reviewed firm seeking to associate with compatible firm for future buy-out of principal. Principal will remain for up to one and a half years during transition to support and sustain client base; $400-450K. Classified Ads - File No. 1269 Retirement-minded Bergen County CPA, looking for a CPA to take over my firm. Gross $750K+.

Must have strong tax background. Small existing client base is a plus. Excellent opportunity.

Classified Ads - File No. 1270 Small Bergen County CPA firm seeks CPA practices from $100k to $600k for acquisition. We have a successful history acquiring firms providing a high retention rate and seamless transition for your clients. Please email bergencountycpa@ gmail.com for more information.

New Jersey Practices for Sale: gross revenues shown: South NJ/DE Valley Area CPA -$1.3M; Multi-Location Tax Franchise-$242K; Ewing Tax & Bkkg-$150K. Call 800-397-0249 or visit www. accountingpracticesales.com to view listings and register for free email updates.

Real Estate Professional office space for lease, includes shared conference room, kitchen, gated parking, security cameras, alarm and utilities. Located on Livingston Avenue in New Brunswick, NJ. Call 908-581-3322 or email beatagall@hotmail.com for more information.

Small Hackensack/Rt. 4 area CPA firm has well appointed offices available for sublease.

Affiliation will be considered. Retirement minded practitioners, wealth managers, or small practice practitioners with capacity to take on more work from our firm welcome. Please email your contact info to bergencountycpa@gmail.com in order to discuss this amazing opportunity.

Classified Advertising Replies to ads with file numbers should be sent to: File______________________ New Jersey CPA Classifieds 425 Eagle Rock Avenue, Suite 100 Roseland, NJ 07068-1723 To see additional classified listings or to place an ad, visit njcpa.org/classifieds.

ADVERTISERS INDEX Accounting Practice Sales 11 accountingpracticesales.com ADP 33 adp.com/njcpa Artha Systems LLC arthasystems.com

3

Bowman & Company LLC 32 bowmanllp.com CAMICO Insurance C4 camico.com Capstan Tax 13 capstantax.com CohnReznick LLP 27 cohnreznick.com EisnerAmper LLP 31 eisneramper.com Friedman LLP 31 friedmanllp.com Headquarters Advisory Group 25 hqadvisorygroup.com Provident Bank 17 provident.bank Roger CPA Review 19 rogercpareview.com Rutgers Business School C3 business.rutgers.edu/taxmaccy

Coming in the November/December 2016 issue of New Jersey CPA

SKC & Co. CPAs LLC 33 skcandco.com Smolin 29 smolin.com

Tax Matters

Thomson Reuters - NJ C2 checkpointcatalyst.com

•

Economic Nexus

•

Overview of the Taxpayer Advocate Service

Untracht Early LLC 28 untracht.com

•

Independent Contractor Versus Employee: It’s Not as Simple as ABC

•

Reverse Sales Tax Audits

Wilkin & Guttenplan, P.C. 29 wgcpas.com

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Changed Specialties?

Earned a Promotion?

Taken on New Challenges?

LET US KNOW SO WE CAN DELIVER THE NEWS AND INFORMATION YOU NEED TO KEEP ADVANCING.

Update your professional profile at njcpa.org/profile.

HAG NJCPA HalfpgAd 072516.pdf

1

7/28/16

4:48 PM

BUSINESS DEVELOPMENT PARTNERS TO NJ CPA FIRMS SINCE 1989 Headquarters Advisory Group works with NJ CPAs to develop successful wealth management practices within their accounting firms. Based on expertise gained from nearly two decades working with CPAs, Headquarters understands the regulatory and cultural issues involved in integrating comprehensive financial services into a tax organization. and specializes in helping you build on your existing client relationships. Your clients stay your clients and we provide the systems, training and support you need to build your wealth management practice.

Securities offered through 1st Global Capital Corp. Member FINRA, SIPC. Investment Advisory Services offered through 1st Global Advisors, Inc. Investment advisory services including fee-based asset management accounts held through NFS, LLC are offered through 1st Global Adviosrs, Inc. All other financial planning services are offered through Headquarters Advisory Group, LLC. Headquarters Advisory Group, LLC and 1st Global Capital Corp are unaffiliated entities.

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Join us in congratulating these women who are making a name for themselves in the New Jersey accounting landscape and beyond. After receiving many deserving nominations, the New Jersey Society of CPAs chose those who displayed a unique combination of NJCPA participation, accounting profession involvement and community service dedication.

Jean I. Abbott, CPA

Amy Y. Both, CPA

Rebecca A. Burke, CPA

Donna H. Buzby, CPA

Stockton University

Neral & Company, P.A.

Ernst & Young LLP

Capaldi Reynolds & Pelosi CPAs, P.A.

Ann Marie Callahan, CPA

Melanie Cobb, CPA, CGMA

Laura M. Crowley, CPA, MBA

Maureen C. Donohue, CPA, CGMA

Caldwell University

E. Martin Davidoff & Associates

Wilkin & Guttenplan, P.C.

Peace Ministries Inc.

Tracey B. Early, CPA

Brittany L. Fedun, CPA

Henrietta G. Fuchs, CPA

Margaret F. Gallagher, CPA

Untracht Early LLC

Wilkin & Guttenplan, P.C.

CohnReznick LLP

WithumSmith+Brown

Continued on page 28 N E W J E R S E Y C P A • S E P T E M B E R • O C TO B E R 2 0 1 6

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CohnReznick is an independent member of Nexia International

JoAnne Geylin, CPA

Stacy L. Gilbert, CPA

Diane Gitto, CPA

Elizabeth B. Harper, CPA

EisnerAmper LLP

Citrin Cooperman & Company LLP

Friedman LLP

Sobel & Co. LLC

Kelly Anne Kennedy-Ryu, CPA

Sarah Krom, CPA, PSA

Carol A. McAllister, CPA, RMA

Yahaira L. Mendez, CPA

Smolin Lupin

SKC and Co. CPAs LLC

Bowman & Company LLP

CohnReznick LLP Continued on page 30

Untracht Early congratulates

Tracey B. Early and Michelle C. Shapiro On being named 2016 Women of Note award winners.

We proudly recognize your commitment to the accounting profession, your community, and the NJCPA. ACCOUNTING

ASSURANCE

TA X

NEW JERSEY 973.408.6700 Pivotal.

C O N S U LT I N G

N E W YO R K www.untracht.com

325 Columbia Turnpike, Suite 202, Florham Park, NJ 07932 1120 Avenue of the Americas, Suite 1507, New York, NY 10036 N E W J E R S E Y C P A • S E P T E M B E R • O C TO B E R 2 0 1 6

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Congratulations to

Kelly Kennedy-Ryu and Noorus Khan

for being recognized as Women of Note by

the NJCPA. Smolin is very proud of you both!

Collaboration is at the core of our approach.

New Jersey • New York • Florida (973) 439-7200 • www.smolin.com

The Wilkin & Guttenplan Family congratulates Laura Crowley, CPA, MBA and Brittany Fedun, CPA on being recognized as 2016 Women of Note by the NJCPA!

1200 Tices Lane, East Brunswick, NJ 08816 732.846.3000 | www.wgcpas.com 555 Fifth Avenue, 17th Floor, New York, NY 10017 212.856.7201 | info@wgcpas.com An Independent Member of the BDO Alliance USA

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Diana Miller, CPA

Sandra E. Mistler-Cipollone, CPA

Jessica D. Offer, CPA

Wiss & Company LLP

Interstate Realty Management Co.

WithumSmith+Brown

Renee Rampulla, CPA, CGMA

Alyssa Shadinger, CPA, CGMA

Debra M. Simon, CPA, M.S.T.

Rampulla Advisory Services LLC

The Pine Hill Group

DMSimon CPA, LLC

Jatinder Singh, CPA

Patricia Vroman-Stuart, CPA

Paula M. Young, CPA

Account Vision LLC

Patricia Vroman-Stuart CPA MBA

EisnerAmper LLP

HONORABLE MENTIONS

Kimberly A. Brandley, CPA CohnReznick LLP

Noorus S. Khan, CPA Smolin Lupin

Stacy M. Lewandowski, CPA Cowan, Gunteski & Co., P.A.

Continued on page 32 N E W J E R S E Y C P A • S E P T E M B E R • O C TO B E R 2 0 1 6

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JoAnne Geylin

Paula Young

Congratulations to our NJCPA Women of Note For outstanding contributions to our clients, our profession and our firm.

Your Colleagues at EisnerAmper

Congratulations to our partners, Diane Gitto & Susan Miano, for their recognition in New Jersey CPA’s 2016 Women of Note program.

Your livelihood, empowered.

New York

Diane Gitto, CPA Partner 327 Central Avenue Linwood, NJ 08221 dgitto@friedmanllp.com

Susan Miano, CPA, ABV, CFF Partner 100 Eagle Rock Avenue, Suite 200 East Hanover, NJ 07936 smiano@friedmanllp.com

New Jersey

Beijing

friedmanllp.com

© 2016 Friedman LLP. All rights reserved.

An Independent Member Firm of DFK with offices wordlwide.

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Pennsylvania

HONORABLE MENTIONS

Susan Miano, CPA

Kelly A. O’Callaghan, CPA

Lisa F. Osofsky, CPA

Friedman LLP

CohnReznick LLP

WeiserMazars LLP

Maria Plucinsky, CPA

Michelle C. Shapiro, CPA

Nina S. Sorelle, CPA

Hunter Group CPA LLC

Untracht Early LLC

Bowman & Company LLP

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SKC & Co. CPAs, LLC congratulates our Managing Partner

Sarah Krom, CPA for being recognized as a 2016 “Woman of Note” by the NJCPA.

We commend her for her leadership, innovation and dedication to our firm and clients.

Thank you Sarah for your contributions to the NJCPA, our community and our firm.

SKC & Co. CPAs, LLC 1 Mars Court, Suite 1 Boonton Township, NJ 07005

B:7.25” T:7.25”

www.skcandco.com T: (973) 335-1112 F: (973) 335-7976

S:7.25”

See how ADP® can help your clients make sense of wage and hour regulations, including the new overtime pay rules, so they won’t miss pizza night: adp.com/NJCPA The ADP logo and ADP are registered trademarks of ADP, LLC. ADP A more human resource. is a service mark of ADP, LLC. Copyright © 2016 ADP, LLC. ALL RIGHTS RESERVED.

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T:5”

New rules around overtime laws under the Fair Labor Standards Act starting on December 1st may impact the way your business clients classify and compensate their employees.

B:5”

S:5”

Family time or overtime.

YOUNG

professionals

Keep Your Eye on the Prize: Pursuing the CPA B Y RONAL D J. S TRAUSS, C PA, AND ST E VE N R . M AR KO FF, C PA

I

magine being an accountant for Usher, Adele or the New Jersey Devils or being on the accounting staff at Google, Disney or one of the accounting firms in your area.

This wide variety of career choices is available for individuals interested in becoming a CPA. Across industries, governments and geographies, from startups to behemoths, the employment options that CPAs enjoy are boundless and never have been more abundant. It all begins after college graduation, with passing the CPA exam and earning the CPA license.

Although substantial time is required to study for the CPA exam, which can clearly compete with graduates’ other priorities, the investment is overwhelmingly worth it. The payback will last a lifetime and will provide both personal and professional fulfillment.

The key areas that are most important to new graduates are as follows: • Job Acquisition — Both undergraduate- and graduate-level students are enrolling in accounting programs at an increasing rate.

Companies are hiring accounting graduates at higher rates, but the competition for those just out of college is fierce. Employers look favorably upon candidates who have made progress toward passing the CPA exam. Be it completing the 150-credithour requirement, enrolling in a CPA review course, or having passed one or more parts of the exam, employers take extra notice of new accounting graduates who take specific steps immediately upon graduation toward passing the CPA exam.

• Promotions and Career Progression — Employees who have passed the CPA exam are more likely to get promoted. In many firms, passing

the CPA exam is a necessity to get promoted to the position of senior accountant. The CPA credential opens up many more alternatives for individuals who want to explore their career options. Whether you are seeking to advance in a firm or competing for a position in another company, the CPA license is a door opener that enables career options and creates opportunities for branching out in a variety of directions.

• Credibility in the Business/Financial World — The deep educational background and knowledge that one needs to pass the CPA exam is excellent preparation for a wide variety of accounting jobs, ranging from tax preparer to controller of a company or a municipality, to auditor or credit analyst. Accounting is the language of business. The CPA foundation in accounting brings enormous knowledge and skill to inform most aspects of the business world. An individual who has the CPA credential is licensed by the state as an accounting expert and has earned a stamp of approval as a professional with valuable specialized knowledge and expertise.

There are important functions in business that only CPAs can perform (such as providing the independent attest function). Additionally, CPAs are bound by a Code of Professional Conduct, which establishes a high standard of professionalism that reinforces the reputation and credibility of the profession throughout society. This combination of deep financial knowledge and high standards of professional ethics, as well as continuing education requirements, places CPAs in an elite professional group.

• Financial Rewards — Being a CPA can result in superior financial rewards. Current estimates are that CPAs earn 15 percent more per year than non-CPA accountants.

Over the course of a 40-year career, that can add up to more than $1 million in additional income. Many companies award raises that are limited; however, where there is flexibility, CPAs are awarded a significantly higher percentage due to their marketability. The financial impact of having the CPA license is measurable and substantial — an important factor individuals need to consider when they evaluate whether or not they should pursue the license.

Ronald J. Strauss, Ph.D., CPA, is an accounting professor at Montclair State University. He can be reached at straussr@mail.montclair.edu. Steven R. Markoff, CPA, CMA, CGMA, MBA, is an instructional specialist in Managerial and Cost Accounting at Montclair State University. He is a member of the NJCPA and can be reached at markoffs@mail. montclair.edu.

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LEGISLATIVE

views

Good News, Bad News in the State Capitol B Y JEFFREY T. KAS ZER M AN, NJ C PA GOVE R NM E NT R E L AT I O N S D I R E C TO R

T

he NJCPA was very busy this spring lobbying on a number of issues that are important to the CPA profession and the business community.

Unfortunately, much of what transpired was negative as far as its impact on creating a favorable economic climate in New Jersey.

On the positive side, there was finally movement in the Legislature on a bipartisan package that would have created a stable funding source for the nearly bankrupt Transportation Trust Fund, phased out the estate tax, reduced taxes on retirement income and provided several other tax relief measures. On the negative side, at the last minute, Gov. Christie insisted on trading out the estate tax phaseout for a one-cent reduction in the sales tax, and the whole package stalled. Its future, particularly the future of phasing out the estate tax that is so important to NJCPA members, is now uncertain.

Continuing with our negative/ positive motif, on the negative side, the Legislature passed a bill to raise the minimum wage from $8.38 to $15. The NJCPA and almost all business groups opposed this measure. On the positive side, the governor is expected to veto the bill.

On the strictly negative side, the Assembly passed legislation (ACR109) that would amend the New Jersey Constitution to require the state to pay annual multibillion-dollar public employee pension payments. The Senate is expected to pass a similar measure this summer, which would bring the issue to a public ballot vote in November. If the ballot question amending the constitution is passed in November, New Jersey would have to make huge pension payments each year no matter their cost and regardless of economic conditions. The state

would be saddled with a mandate that requires annual pension payments of about $3 billion now and $6 billion by 2023 — without identifying any source for that funding.

“The supporters of this measure are making a bet on higher economic growth that would produce faster growth in state revenues,” said NJCPA CEO and executive director Ralph Albert Thomas, CGMA. “But if that growth doesn’t materialize, requiring extra spending of more than $3 billion in the context of a $33 billion current state budget means sharply higher taxes or draconian spending cuts to essential services, like school funding and municipal aid.” He added that the announcement in the spring that the state faced a combined $1 billion budget shortfall for fiscal years 2016 and 2017 “makes it even clearer that this legislation is dangerous to the fiscal health of New Jersey.”

The NJCPA and other groups concerned about the proposed constitutional amendment will be waging a concerted public education campaign to inform voters of the negative consequences of this change.

While the NJCPA is sensitive to the legitimate concerns of public employees over the fate of their pension plan, we believe the responsible approach is for all interested parties to work together on forging a solution to the pension funding problem. We believe that the 2015 report issued by the New Jersey Pension and Health Benefit Study Commission should be used as a starting point for discussions on finding a fiscally responsible and fair solution.

Getting back to the positive side, the NJCPA was successful in introducing legislation (A3959) that would amend the Accountancy Act of 1997 to make it conform with the Uniform

Accountancy Act. The UAA is model legislation written jointly by the National Association of State Boards of Accountancy and the American Institute of CPAs (AICPA). New Jersey’s accountancy statute needs to be updated too, so that the laws governing the profession are modernized to reflect the changes that have taken place over the past 20 years and so that our laws better conform to the accountancy laws of other states.

Many of the changes that the bill calls for are technical in nature. The most substantive changes are: • Firm Mobility. The bill would allow out-of-state firms to perform attest functions in New Jersey without having to register with the New Jersey State Board of Accountancy.

They would still be subject to the full regulatory oversight of the board.

Fifteen states already allow this, and more are expected to follow suit.

• CPE Reciprocity. This exempts CPAs who hold multiple state licenses from having to meet the individual CPE requirements of each state so long as the licensees meet the CPE requirements of their home state.

Currently, 22 states allow for CPE reciprocity, and more are expected to do so soon.

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Learn more about the legislation mentioned in this article, and other legislation the NJCPA is tracking, at njcpa.org/advocacy.

MEMBER

profile

Twin CPAs Share Unique Bond From Childhood to Accounting B Y ELIZABETH QUIÑ ONE S, NJ C PA C ONTE NT SP ECIAL IS T

J

esse and Chris Stoop, identical twins, grew up playing the same sports and ultimately chose identical career paths. Jesse is a senior audit manager at CohnReznick LLP, and Chris is an audit manager at EisnerAmper LLP. They have both been with their respective firms for nine years, and both are CPAs. Jesse is four minutes older than Chris: “I joke that I had four minutes of freedom” before Chris was born. Chris says they’re “two peas in a pod.” They’re competitive when it comes to sports and push each other professionally.

Growing Up Together

Even in their competitiveness, they always encouraged and pushed each other to be better athletes. In high school, the Stoop brothers participated in wrestling, track, skiing and baseball.

But they were never rivals. “We never had to compete for one spot. There was always room for both of us to play,” said Jesse. Their athletic pursuits were even documented in an Asbury Park Press feature article. The twin brothers continued to play together as defensive backs for their college football team.

The Stoop brothers say being twins comes with more positives than negatives. “You always have someone to play with or fight with. We always had that special bond. It was always good to have a partner in crime,” said Chris. When their family moved from Pennsylvania to New Jersey, for

instance, Jesse and Chris leaned on each other to adapt to the change.

They don’t take it personally when people mistake their names. “I have an aunt (78) to this day who says, ‘Chris, right?’ and I say, ‘No, it’s Jesse.’” The brothers like to occasionally pretend they are the other twin, to playfully confuse people. “When someone comes up to me saying they know me, I sometimes like to joke and say, ‘I’m sorry, but I’ve never met you before,’” said Jesse.

Their Accounting Journeys

Jesse didn’t plan to major in accounting. “I didn’t go to Fairleigh [Dickinson University] intending to be an accounting major, but I took the first basic class [in accounting] and realized it was interesting. There were a bunch of accounting firms at a career fair I attended as a freshman. I wasn’t looking for a job, but all these people were looking to hire me. So I took more classes and found that I really liked it,” said Jesse. He earned a Bachelor of Science in Accounting and then went on to earn a Master of Science in Accounting at Fairleigh.

Chris was a marketing major during his undergraduate years. After a few internships, Chris realized he wanted

to take a different career direction. “I did a lot of internships in the finance field and realized the finance route wasn’t what I was interested in, so that’s when I started to learn more about accounting … That’s when I made the switch by getting a master’s in accounting,” said Chris. After the brothers attained their graduate degrees, they passed the CPA exam within a year of each other.

Jesse says that one benefit of having a twin brother in the same profession is that they can give each other insights.

When they have questions or need advice about navigating a situation at work, they often lean on each other for support.

Life Today

The comradery between the Stoop brothers has continued into adulthood.

They live within 10 minutes of each other and are involved with NJCPA volunteer activities. Jesse has been part of the Student Programs & Scholarships Committee for the past four years.

Chris is now president of the Mercer Chapter. Both brothers are married, and Jesse has two children.

Chris says, “We were brothers in the backroom, and now we’re brothers in the boardroom. It’s come full circle, in a much different environment.”

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business.rutgers.edu/taxmaccy

Rutgers Business School Master of Accountancy in Taxation > > > > >

Largest graduate tax program in New Jersey Faculty emphasize practicality Designed for career professionals Broad array of course offerings Flexible course schedule

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www.business.rutgers.edu/taxmaccy kathleencharmon@business.rutgers.edu (973) 353-5028

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Connect with CAMICO. Sign up for CAMICO Connection — our monthly enewsletter with risk management tips and articles. www.camico.com/camico-connection

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