S E P T E M B E R /O C TO B E R 2 01 9
HOW NEW JERSEY MEASURES UP
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
Many courses offered on both the Newark and New Brunswick campuses [150business.rutgers.edu/taxation credit hours requirement satisfied in 2 semesters] business.rutgers.edu/taxmaccy kathleencharmon@business.rutgers.edu (973) 353-5028
Rutgers, The State University of New Jersey – founded 1766
contents S E P T E M B E R /O C TO B E R 2 01 9
THE MAGAZINE OF THE NEW JERSEY SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
4 Rethinking New Jersey:
What’s Good and What Needs Fixing RALPH ALBERT THOMAS, CPA (DC), CGMA Chief Executive Officer & Executive Director rthomas@njcpa.org ELLEN C. McSHERRY Chief Operating Officer emcsherry@njcpa.org DON MEYER Chief Marketing Officer dmeyer@njcpa.org RACHAEL BELL Managing Editor rbell@njcpa.org KATHLEEN HOFFELDER Content Editor khoffelder@njcpa.org MARC L. REIN Multimedia Specialist mrein@njcpa.org
We invited New Jersey legislators, academics and other thought leaders to discuss what they like best about New Jersey and what can be improved. Find out some specific recommendations and what procedures are necessary to put those in place. Discover what works best to keep businesses and residents in New Jersey
8 Legislative Initiatives to Help
New Jersey CPAs and Businesses The NJCPA advocates for legislation and policies that will help New Jersey businesses thrive. Learn about some of the key initiatives we’re supporting, including public worker pension and health benefits reform, pass-through entity legislation and Section 1202 incentives.
10 Tax Season Post-Mortem:
Lessons Learned and Best Practices for 2020 Tax season can leave CPAs and their staff feeling drained, and the 2019 tax season was particularly challenging. Firms should convene on what went right and what challenges frustrated staff. Simple changes to the process can make a stressful time more manageable for 2020 — both on a federal and state level.
2 CLOSE UP THE NEW JERSEY SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS 105 EISENHOWER PARKWAY SUITE 300, ROSELAND NJ 07068 973-226-4494 | NJCPA.ORG #NJCPAMAG READ NEW JERSEY CPA ONLINE AT NJCPA.ORG/ NEWJERSEYCPA DE SIGN / P RODUCT I ON / ADVERTISIN G THE YGS GROUP 3650 WEST MARKET STREET YORK, PA 17404 Advertising Contact: LAURA GAENZLE ACCOUNT EXECUTIVE 717-430-2351 laura.gaenzle@theygsgroup.com
Student Loan Debt at Crisis Levels 12 ACCOUNTING, AUDITING & ATTEST
Changes Looming for Employee Benefit Plan Auditors 13 BECOMING A CPA
Lights, Cameras, Internships 14 BUSINESS ADVISORY SERVICES
What Accountants Need to Know About Pay Equity in New Jersey: Discovering and Addressing Pay Disparities
16 CORPORATE ACCOUNTING
Managing the Business in Good Times and Bad: Is There a Difference? 18 FIRM & PRACTICE MANAGEMENT
Finding and Leveraging Today’s Interns for Tomorrow’s Success 20 GOVERNMENTAL & NONPROFIT
Complying with New Nonprofit Reporting Standards 21 PROFESSIONAL DEVELOPMENT
5 Tips for Networking Newbies
22 TAX
Beyond Mandatory Repatriation and Corporate Rate Change Considerations 24 NJCPA NEWS
• NJCPA Ovation Award Recipients • Kickball Tournament a Success • NJCPA Food Drive Kicks Off 35 CLASSIFIEDS 36 MEMBER STORY
Robert Scorzo, CPA
CLOSE UP
Student Loan Debt at Crisis Levels BY DON MEYER, CHIEF MARKETING OFFICER, NJCPA
Quick, what’s the second-highest consumer debt category, behind only mortgage debt? If you guessed credit card or auto loan debt, close but no cigar. The answer is student loan debt. Student loan debt has been in the news a lot recently, and for good reason. According to a 2019 Federal Reserve report, more than 44 million borrowers owe $1.5 trillion in student loan debt, and nearly two-thirds of young adult job seekers have student loan debt, with an average balance of $33,332. Student loan advocates point out that federal student loans are a key way for Americans to pay for college and boost their career earnings. Critics have said that debt is damaging the economic prospects of a generation of Americans, pointing to the Federal Reserve report showing that student loan debt prevented about 400,000 young families from purchasing homes. Additionally, a 2015 study by economists at the Federal Reserve Bank of Philadelphia found “a significant and economically meaningful negative correlation” between rising student loan debt and falling small-business formation. What’s the situation here in New Jersey? A report by the New Jersey Business & Industry Association (NJBIA) found that 61 percent of New Jersey graduates in 2017 were in debt. New Jersey is considered a “high student debt state” and may contribute to the outmigration of young adults from the state. At the NJCPA, we are studying the issue closely and have taken a number of steps to help bring relief to members and other New Jersey grads. We have met with lawmakers about possible legislation, are working towards educating students and the general
public about student loans and are building a coalition of other interested business groups. According to an NJCPA poll conducted in June, more than 80 percent of 623 CPAs surveyed said they either “strongly agreed” or “somewhat agreed” that student loan debt in the United States is a financial crisis. More than 75 percent of respondents considered student loan debt in New Jersey to be a “major problem.” Survey respondents said their clients have put off major life decisions and purchases due to their high student loan debt. Of the nearly 270 respondents who said they knew someone who delayed this kind of decision or purchase, 80 percent said they put off buying a home and an almost equal number said they chose not to save for retirement. More than 65 percent put off saving for emergencies, while 42 percent put off getting married and 39 percent delayed having children. A HELPING HAND Bipartisan federal legislation could help both people with outstanding student loan debt and the employers that want to help them. The Employer Participation in Repayment Act, a bill awaiting action in Congress, would make a company’s contribution to employees’ student debt tax-advantaged, like 401(k) retirement contributions are, for example. Currently, the government taxes the student loan contributions as ordinary income for the employee and also requires companies to pay the payroll tax on the benefit amount. Because of this benefit being non-tax-advantaged, it makes it difficult for employers to offer this benefit. The growth in student loan debt has made contributions to the loans an increas-
ingly popular benefit among employers, particularly as they face increased competition for skilled workers. Employers providing student loan repayment benefits include PwC, Fidelity and Aetna. The benefit seems to be popular among employees, too. A report found that 86 percent of employees would commit to a company for five years if the employer helped pay back their student loans. On the state level, about a dozen states, including California and Connecticut, have passed “Student Loan Bills of Rights” or taken other political action to address the student loan crisis. States have instituted increased protections for student loan borrowers, just like those that mortgage and credit card borrowers enjoy. READ MORE STUDENT LOAN DEBT NEWS AND RESOURCES njcpa.org/advocacy/ studentloandebt
New Jersey CPA (ISSN 1534-6692) is published six times per year by the New Jersey Society of Certified Public Accountants, 105 Eisenhower Parkway, Suite 300, Roseland, NJ 07068. Issue No. 77 Copyright © 2019 New Jersey Society of Certified Public Accountants. Annual membership dues include $9 for a one-year subscription to New Jersey CPA magazine. Members may not deduct subscription price from dues. Periodicals postage paid at Roseland, NJ, and at additional mailing office. POSTMASTER: Send address changes to New Jersey CPA, 105 Eisenhower Parkway, Suite 300, Roseland, NJ 07068-1640. 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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SEPTEMBER/OCTOBER 2019 | NEW JERSEY CPA
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RETHINKING NEW JERSEY: WHAT’S GOOD AND WHAT NEEDS FIXING By KATHLEEN HOFFELDER
NJCPA CONTENT EDITOR
The NJCPA asked New Jersey legislators, lobbyists and state-focused organizations some tough questions about what makes New Jersey an attractive state to live and do business, what needs to be improved, and how can we stem the tide of young professionals and retired citizens from leaving the state. Here are their responses: WHY DO BUSINESSES CHOOSE TO OPERATE IN NEW JERSEY? WHAT KEEPS THEM HERE? “Businesses choose to locate in New Jersey because of our superior assets, including
our human capital. We are located adjacent to two world-class cities and have great cities of our own. Because of this, we have unparalleled transportation infrastructure. There’s only one New Jersey Turnpike. We are also at the center of the universe for many important industries — particularly those related to life sciences. Those industries that need highly skilled workers come to New Jersey because we have a very well-educated workforce and elite research universities, like Princeton, Rutgers, Rowan and NJIT, churning out more high-skilled individuals each year. A
CONTRIBUTORS In order of appearance
STEPHEN SWEENEY Senate President
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STEVEN V. OROHO Senator
SEPTEMBER/OCTOBER 2019 | NEW JERSEY CPA
DALE FLORIO, ESQ. Princeton Public Affairs Group
REGINA EGEA President Garden State Initiative
few other states have some of these assets too, and we are constantly competing with them. That is why we need a robust business incentive program to attract businesses when we need to get them over the edge. It would be a mistake for the Governor not to extend the Grow NJ Assistance Program and the Economic Redevelopment and Growth (ERG) Program, especially after the New Jersey Economic Development Authority (EDA) has made the necessary improvements regarding oversight and compliance.” — Senate President Stephen Sweeney “What New Jersey is good at is creating wealth and exporting that to everyone else, but our total tax structure is not competitive. We need to do more on the small business tax-incentive front. We also need to get our state spending under control. Will there be another recession? We all know there will be another recession. How long? How deep? We don’t know. I was there in the Great Recession and the revenues went down by $3 billion. If that happens today, what kind of shape would we be in?” — Senator Steven V. Oroho (R, District 24) “The state benefits because of its physical assets and geographical location in the metropolitan area. Transportation, access to the financial markets and a vibrant port system all contribute to the state’s attractiveness. Most surveys suggest that the quality of life is a key factor to retention of businesses. Our location provides access to a diverse labor pool which can attract highly educated employees from a threestate area.” — Dale Florio, Esq., Princeton Public Affairs Group
THOMAS BRACKEN President and CEO New Jersey State Chamber of Commerce
ROY FREIMAN Assemblyman
MICHELE SIEKERKA, ESQ. President and CEO New Jersey Business & Industry Association
WHAT’S THE NUMBER-ONE REASON NEW JERSEY-BASED COMPANIES CHOOSE TO LEAVE? WHAT’S DRIVING THEM OUT? “New Jersey is not competitive in our region, let alone nationally. One of Garden State Initiative’s (GSI) research reports last year assessed New Jersey’s competitiveness in six key industries against five near-neigh-
NEW JERSEY CPA | SEPTEMBER/OCTOBER 2019
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bor states. Our cost of doing business, our tax burden and the cost of living for employees drive our poor rating in nearly every circumstance. We’re not even on the field never mind putting up a fight. We rank at the bottom of every independent list when it comes to business competitiveness, cost of living and business environment. The reality is that other states are offering a better value proposition than New Jersey. We lack political leadership that understand how to grow our state’s economy and create and retain high-paying jobs.” — Regina Egea, president, Garden State Initiative “Taxes are an issue, no question. Mandates are an issue, paid sick leave, family leave, minimum wage, pay equality. All of the mandates saddled on business are a form of tax for employers, and there’s the fear of things to come. The lack of attention paid to the business community is a significant deterrent to businesses. We have a high cost of living, a high cost of labor force so the cost issue, the importability issue, is very problematic in some areas. There are many hurdles to overcome, and recently with all the turmoil between the Legislature and the Governor, the whole reputational issue and perception of discord in the state is not helping the situation at all. Just the sheer proposal of another tax — the millionaire’s tax — the sheer mention of that is starting to turn people off. Those are some of the things that turn people away, and in some cases, prompt them to look to leave the state.” — Thomas Bracken, president and CEO, New Jersey State Chamber of Commerce “I had a number of people come into my office in support of the millionaire’s tax and I would ask them why they think we need it. When they would say, ‘we need the programs that are being put out there,’ I would ask them, ‘what if we could hypothetically fund these without this tax?’ The answer universally came back, ‘no, we want the tax.’ The answer really gets into the fact that it’s not necessarily about the revenue; it’s economic or social justice that’s really driving this. It is a sentiment of a divide growing between the high earners and the middle class. That gap
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keeps getting wider, and this is about paring that back a bit. When you have those forces versus economic forces and math, now you are going into a completely different realm.” — Assemblyman Roy Freiman (D, District 16) WHAT STATE OR STATES SHOULD NEW JERSEY EMULATE AND WHY? WHAT DO THEY HAVE THAT NEW JERSEY LACKS? “New Jersey Business & Industry Association (NJBIA)’s 2019 Regional Business Climate analysis tracked six individual business costs and compared them to those of Connecticut, Delaware, Maryland, Massachusetts, New York and Pennsylvania. Overall, New Jersey ranked as the least competitive in the region, with the highest income tax rate, corporate tax rate, state sales tax rate and property taxes paid as a percentage of personal income. So, when you ask what other states have that New Jersey lacks, the answer is clear: lower taxes and a more competitive business climate. Our state leaders need to address the state’s structural budget deficiencies — high debt and an unsustainable public employee pension and benefits system — that lead to tax increases in each state budget and hinder New Jersey’s ability to make the investments in infrastructure and higher education that support a successful innovation economy. NJBIA’s vision is to see New Jersey reclaim its stature as an innovation leader. To that end, the state to emulate is Massachusetts. NJBIA’s Indicators of Innovation report found that the Boston area’s top-tier post-secondary institutions have been a magnet for creating an ecosystem of innovative startups that offer the well-paying jobs that attract young, educated people. In fact, Massachusetts has experienced a net gain of 200,000 adults aged 18 to 34 years old between 2007 and 2016, while New Jersey has had a net loss of nearly the same amount. Tellingly, as of June 2017, Massachusetts has invested more than $650 million in capital projects, company grants and loans, academic research, tax incentives, equipment and supplies,
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and other grants — much of which has been distributed in the Greater Boston region. Venture capital also has an enormous impact on expanding innovative concepts from startups to commercialization. Massachusetts received $12.27 billion in deal flow investments in 2017, while New Jersey received only $781 million, so clearly New Jersey needs to do better in this area.” — Michele Siekerka, Esq., president and CEO, New Jersey Business & Industry Association “It’s really not about what other states do to retain and attract businesses. All states have incentive programs for business purposes. Fundamentally, New Jersey needs to stay on a long-term pay-down of its unfunded pension liability and reform the health insurance plan for public employees. These two costs alone drive the annual budget discussions in Trenton every year and make it difficult for governors and legislators to consider other programs to keep New Jersey competitive.” — Dale Florio, Esq. HOW DO WE STEM THE TIDE OF STUDENTS AND YOUNG PROFESSIONALS LEAVING THE STATE? “The key to keeping New Jersey high school graduates here for college is investment. We need to increase operating aid to our state colleges and universities so that they can maintain affordable tuitions, and we need to provide additional capital funding so they can offer state-ofthe-art facilities, labs, living quarters, etc. The Building Our Future Bond Act funded important projects like the new Rutgers Honors College that will help us retain our best and brightest. Unfortunately, because of our fiscal crisis, which is growing worse each year due to the escalating pension and health benefit payments, we cannot give our colleges the operating aid they deserve. We cannot issue a second round of “Building Our Future” higher
education bonds because our credit rating is so poor. Only when we enact the Path to Progress reform will we be able to achieve fiscal sustainability and make the needed investments in higher education.” — Senate President Stephen Sweeney “Clearly New Jersey needs to do more to make college affordable, but the Post-Secondary Education Task Force has also made other recommendations related to skills building and career exploration, some of which have already started to be addressed. A higher education branding campaign is being undertaken by the New Jersey Presidents’ Council, and voters last year approved $350 million for the much-needed expansion of career and technical education at county vocational schools and $50 million for career and technical education projects at county colleges. The Legislature has
also passed a 3-Plus-1 college affordability program allowing students to complete three years of study at a county college, followed by one year at a partnering fouryear college to obtain a bachelor’s degree, as well as legislation to make apprenticeships more accessible for New Jersey residents in high-growth industries.” — Michele Siekerka, Esq. HOW CAN WE KEEP RETIREES HERE? “The cost of living in our state is exceedingly high, and we are working to make New Jersey more affordable for our retirees. That is why we passed legislation to increase the amount of retirement income that can be excluded for income tax purposes from $20,000 to $100,000 and why we fully funded the Homestead and Senior Freeze property tax relief programs for the current year.” — Senate President Stephen Sweeney
“The affordability crisis for our seniors is a tragedy. MoneyWise just ranked New Jersey second from the bottom of attractive states in which to retire. People who have built our communities are forced to sell their homes and leave behind children, grandchildren and relationships built over decades. New Jersey’s property taxes have doubled in the last 20 years — does anyone seriously believe that average retirement income has? Until there are honest-to-goodness property tax reductions driven by lower public spending, New Jersey will continue to lose retirees to not just Florida, but also our neighbors Delaware and Pennsylvania, where retirees do not have to completely sever their relationships with New Jersey family and friends and can enjoy a more hospitable tax climate.” — Regina Egea
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LEGISLATIVE INITIATIVES TO HELP NEW JERSEY CPAs AND BUSINESSES By KATHLEEN HOFFELDER, NJCPA CONTENT EDITOR AND JEFF KASZERMAN, NJCPA GOVERNMENT RELATIONS VICE PRESIDENT
The NJCPA has long advocated for the policies and procedures that will help New Jersey businesses thrive. As part of its mission to represent the interests of its members in Trenton and beyond, NJCPA meets with state representatives and the Governor’s office as well as works with various business groups to make New Jersey a more viable place to live and conduct business. 8
CPAs have always had a strong vantage point when it comes to knowing the challenges that businesses face in the state and what’s needed to improve credit access, staff retention and overall financial success — which is why NJCPA also regularly connects with its members, chapter leaders and interest group heads. We routinely solicit feedback by surveying our members on important legislative initiatives and issues affecting themselves and their clients to inform New Jersey legislators, the press and public. Here are some of the initiatives we support: ADDRESSING THE PENSION AND HEALTH BENEFIT FUNDING CRISIS New Jersey currently has unfunded pension and benefits liabilities of $151.5 billion and is projected to spend $11 billion in 2023 for state and local government worker pensions and health benefits, which equates to about 27 percent of the state’s projected budget. The NJCPA endorses the pension and health benefit reform recommendations laid out in the Economic and Fiscal Policy Workgroup’s “Path to Progress” report. One of the most significant recommendations (S3753) calls for shifting new state and local government employees and those with less than five years of service in the Public Employees’ Retirement System and the Teachers’ Pension and Annuity Fund from the current defined benefit pension system to a sustainable cash balance plan. The current system would be preserved for employees
SEPTEMBER/OCTOBER 2019 | NEW JERSEY CPA
with over five years of service who have vested contractual pension rights. HELPING NEW JERSEY PASS-THROUGH ENTITIES The NJCPA strongly supports passthrough legislation (S3246) proposed by NJCPA president-elect Alan Sobel, CPA, and sponsored by Senators Paul A. Sarlo (D, district 36), Troy Singleton (D, district 7), Steven V. Oroho (R, district 24) and Anthony Bucco, Sr. (R, district 25). The legislation calls for flow-through entities, such as sub-S corporations, partnerships, LLCs or sole proprietorships, to pay entity-level taxes on their net taxable income instead of having individual business owners pay the New Jersey Gross Income Tax (GIT). Currently, the net taxable income is reported on a business owner’s personal tax return, and taxes are paid by the individual. The bill would allow these owners to get around the federal state and local tax (SALT) deduction cap. In an NJCPA member poll earlier this year, 72 percent of the respondents felt this move would improve New Jersey’s business climate, and 80 percent said they have clients who would benefit from the legislation. PROVIDING IRC SECTION 1202 INCENTIVES In an effort to promote investment and job creation in New Jersey, the NJCPA drafted S2265/A4393, which follows the lead of the federal government and the vast majority of states in offering Internal
“somewhat agreed” that student loan debt at $1.6 trillion in the United States is a financial crisis. And more than 75 percent considered student loan debt in New Jersey to be a “major problem.” Respondents said that clients with significant student loan debt are putting off major life decisions, such as purchasing a home, getting married or having children, as they work to pay off their debt. The NJCPA has created a task force made up of staff, members and representatives from other business organizations looking at how the Society can help members and the public through legislation, education and other initiatives.
Revenue Code “Section 1202” tax incentives to targeted New Jersey-based businesses owners. The incentives would be offered to those who are willing to make a long-term commitment to invest in small and medium-sized New Jersey-based companies. The capital gains would not be taxed at the state level. ENCOURAGING LOCAL GOVERNMENTS TO USE SHARED SERVICES As noted in the Path to Progress report, this legislation (S1) would modify state laws to encourage and facilitate shared services, joint contracts and consolidations among county and municipal government. Among the many items included in the legislation is the re-establishment of a Commission that would undertake a study of shared services to identify the proper size, scale and level of government at which various services can be delivered most efficiently and
cost-effectively and make recommendations for legislation based on those analyses. IMPLEMENTING PROFESSIONAL MALPRACTICE REFORM The NJCPA supports this bill (A480) which requires that civil actions alleging professional malpractice be brought within two years, as is the case with civil actions generally. Currently, the statute of limitations in professional malpractice cases is six years. The bill passed the Assembly Judiciary Committee in March 2019. EASING THE STUDENT LOAN DEBT BURDEN The negative impact of student loan debt is a growing problem across the country, which is why the NJCPA supports bills, such as S1136 and A4900, to provide various forms of relief. In a recent NJCPA member poll, more than 80 percent of respondents either “strongly agreed” or
ESTABLISHING A LIMIT ON APPEAL BONDS The NJCPA and the New Jersey Civil Justice Institute support this legislation (A434) which limits the amount of appeal bonds in civil actions to $50 million. When a defendant loses a case at trial and the plaintiff receives a monetary award, state law typically allows the plaintiff to collect that money as soon as the trial court proceedings are completed. In many cases, however, the defendant will appeal to a higher court seeking reversal of the trial court’s determination. Under current New Jersey law, the defendant must post a bond for the full amount of the award while the appeal is pending. With awards now reaching hundreds of millions of dollars, it is often financially ruinous for a defendant to post such a large bond, and this de facto inability to appeal is used by plaintiff attorneys as a club against defendants. Defendants are forced to settle cases even though they are confident an unfair award would be lowered or dismissed at the appellate level. This legislation will help ensure that the appellate level remains open to defendants who are hit with large damages at the trial level.
READ MORE NJCPA LEGISLATIVE ACTION CENTER njcpa.org/advocacy PATH TO PROGRESS REPORT AND PROPOSED LEGISLATION pathtoprogressnj.org
NEW JERSEY CPA | SEPTEMBER/OCTOBER 2019
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TAX SEASON POST-MORTEM: LESSONS LEARNED AND BEST PRACTICES FOR 2020 By JASON CULLARI, CPA AND JAY SOOJIAN, CPA CULLARI CARRICO, LLC
Many CPA firms reported that the 2019 tax season was more challenging than usual as they worked to implement all of the Tax Cuts and Jobs Act (TCJA) and New Jersey tax changes.
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Immediately after the April 15 filing deadline, our firm holds meetings where all departments convene and discuss what went right during tax season, what challenges caused frustration and what improvements need to be made to internal processes so that these same stressors do not carry into our next busy season. The following summarizes what we found, how we responded and what we are continuing to do. Other accounting professionals may also have experienced the following: NEW JERSEY’S CHANGES We found through these internal meetings that not only was the 2019 tax season particularly challenging because of the TCJA, but helping our clients navigate through the New Jersey Gross Income Tax Act added additional complexities. That Act increased the income tax rate for filers over $5,000,000 and increased the Earned Income Tax Credit. The property tax deduction increased from $10,000 to $15,000 and a new Child and Dependent Care Credit was added. Tax staff were charged with understanding, analyzing and communicating the new legislation to our clients. Since the changes impacting New Jersey taxpayers were relatively easy to understand, we were able to use white papers to blast a description of the changes out via email. Overall, members of our tax department found that clients read the white paper and had a general understanding of the changes before year-end
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conversations occurred which helped the overall flow of the planning and preparation process. TIMELY 1099s The Jan. 31 deadline for 1099 issuance provided a short window for client accounting departments to summarize data, prepare forms, process and e-file 1099s. For us, staff accountants and administrative staff were particularly nervous about the quick deadline. Although partners and managers prepared our mid-sized and larger clients, we didn’t get as far in front of the deadline for some smaller or unforeseen jobs. While extensions for 1099s are a useful tool, they are allowed in certain limited circumstances. Additionally, staff reported that the client perception of extensions directly at the start of the season factored into their overall client satisfaction level at the end of the season. Our firm realized that at the beginning of December, our staff need to be reminded to educate clients of their responsibilities in the e-filing process. UNDERSTANDING 199A AND 163( J) Another challenge for our staff and the profession as a whole was understanding IRC Code Section 199A and the complexities of the qualified business income (QBI) deduction. For example, our tax partners urged managers to provide staff with the tools necessary to get through this change. Since our firm has a concentration of real estate related clients, we assigned two firm industry leaders as point persons
and educators, which helped to ensure staff were familiar with parameters, such as assessing whether clients’ activities rose to the level of a Section 162 trade or business. The application of IRC Code Section 163(j) relating to the limitation of the business interest deduction, particularly with controlled groups, is also a point of discussion at many firms. Since most attention was focused on QBI, this complexity caught professionals by surprise, specifically on the reporting and disclosure side. One way that our firm addressed this issue was by drafting a uniform disclosure format for our pass-through entity tax returns. Providing consistent disclosure limited the requests from other professionals for more detailed information. UNDERWITHHOLDING It was vital to understand the potential confusion that changes to the withholding tables in early 2018 would create as taxpayers began filing tax returns in early 2019. For example, we began our education early by providing a tax reform impact summary to certain clients in order to manage expectations. Clients were still unpleasantly surprised when 2018 tax refunds were smaller or balances owed were higher. Managers and staff commented that clients were challenged in attempting to understand an already misunderstood concept; that the amount of taxes due or refunded depend upon the amounts paid in. ENHANCED DUE DILIGENCE REQUIREMENTS Another challenge involved the expansion of the due diligence requirements under the TCJA to cover the head of household filing status. According to treasury regulations, tax professionals can satisfy these requirements by interviewing the taxpayer, asking adequate questions and contemporaneously documenting the responses. Having a telephone interview with clients who claimed an earned income, child care or education credit as well as those utilizing the head of household filing status in lieu of trying to obtain a written questionnaire yielded the most efficient approach. However, staff commented that a standard interview sheet to document responses would have been helpful. In our case,
managers and partners found that ensuring the staff interviewer sign and attest to the documented conversation helped hold them accountable to both the conversation and the return. Feedback from these person-to-person communications produced a positive client response, and we found that junior tax staff grew professionally through this interaction. CLIENT COMMUNICATION Our post-season shakedown highlighted that accounting professionals are still feeling the impact of the federal and state tax law changes. Firms need to place an emphasis on consistent client communications so that clients understand how they were impacted, giving them a chance to reflect on how to take advantage of this new law in overall planning and choice of operating entities and residency. While there was a concern that some clients might take on their own tax preparation given the increased standard deduction limitations on itemized deductions, that has been dulled by the amount of post-season planning and projection work we have already accumulated. The complexities of the QBI deduction, the mortgage interest deduction including definitions of
acquisition indebtedness, and limitations on deductibility of interest on home equity indebtedness, as well as state and local tax limitations, has increased work and billings in many accounting practices. Overall, it’s a welcome light at the end of the tunnel. Jason Cullari, CPA, MBA, PSA, is the managing member and executive committee member of Cullari Carrico, LLC. He is a member of the NJCPA Federal Taxation and Nonprofit interest groups and can be reached at jcullari@cullaricarrico.com. Jay Soojian, CPA, is a member and an executive committee member of the firm and a tax committee leader at Cullari Carrico, LLC. He can be reached at jsoojian@cullaricarrico.com.
LEARN MORE NOV. 19, MOUNT LAUREL ANNUAL TAX UPDATE: INDIVIDUALS AND SOLE PROPRIETORS
NOV. 21, ROSELAND AND ONLINE; NOV. 22, ISELIN AND DEC. 5, MOUNT LAUREL THE BEST INDIVIDUAL INCOME TAX UPDATE COURSE BY SURGENT njcpa.org/events
NEW JERSEY CPA | SEPTEMBER/OCTOBER 2019
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ACCOUNTING, AUDITING & ATTEST
Changes Looming for Employee Benefit Plan Auditors BY ELIZABETH B. HARPER, CPA, SOBELCO
More than two years ago, the American Institute of CPAs (AICPA) issued an exposure draft designed to overhaul employee benefit plan (EBP) auditing standards. The final standard was issued in July 2019 and consists of many changes for plan auditors. As of September 2017, the AICPA received over 100 comment letters from auditors, state societies (including the NJCPA), state auditors, preparers and attorneys, to name a few. These comment letters were discussed by the AICPA’s Auditing Standards Board (ASB). Many of the concerns that were raised were addressed by the ASB in the final standard. As stated by Linda Delahanty, CPA, senior manager of the AICPA’s Audit and Attest Standards Team, “Many auditors were relieved that the reporting on specific plan provisions, specifically the report on findings, was removed from the final standard.” As expressed in the comment letters, 66 percent did not support the specific procedures and 94 percent did not support including findings in the report. Delahanty stated, “these reportable findings will be required to be reported to those charged with governance (TCWG) rather than available as public information.” The final standard, Statement on Auditing Standards (SAS 136) Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA, is effective for periods ending on or after Dec. 15, 2020, and early implementation is not permitted. WHAT’S CHANGING Most notably, the new standard will significantly change the auditor’s report for limited-scope audits, which will be referred to as ERISA section 103(a)(3)(C) audits. The Department of Labor (DOL) rule 29 CFR 2520.103-8 allows plan management to make an election when a bank or similar institution can certify that the investment information is prepared
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by a qualified institution in accordance with 29 CFR 250-103-5. The new report will conform to the new auditor reporting model in SAS 134 “Auditor Reporting and Amendments, Including Amendments Addressing Disclosures in the Audit of Financial Statements.” The contents of the ERISA Section 103(a)(3)(C) report will include the following: • The scope and nature (required to be placed first) • Opinion (required to follow the scope and nature section) • Basis for opinion (required to follow the opinion section) • Going concern (if applicable) • Key audit matters (if applicable) • Responsibilities of management for the financial statements • Auditor’s responsibilities for the audit of the financial statements and other matter-supplemental scheduled required by ERISA. “The greatest benefit with this new report is that it will allow for greater transparency and more details about the procedures performed during the audit and clarifies management’s responsibility for selecting this type of audit,” stated Delahanty. The new standard will also provide consistency in application of audit procedures. Some of the new requirements were already being performed by plan auditors and now they will be required for all audits. These include: • Engagement acceptance • Audit risk assessment and responses • Communication with TCWG, ERISA Section 103(a)(3)(C) requirements • Written representations The auditor’s report without ERISA 103(a)(3)(C) election will contain the following sections: • Opinion (required to be placed first) • Basis for opinion (required to follow the opinion section)
SEPTEMBER/OCTOBER 2019 | NEW JERSEY CPA
• Going concern (if applicable) • Key audit matters (if applicable) • Responsibilities of management for the financial statements • Auditor’s responsibilities for the audit of the financial statements and other matter-supplemental scheduled required by ERISA conforming with the SAS 134 PLAN FOR THE TRANSITION In her concluding remarks, Delahanty advised all plan auditors to, “Get the new standard and read it early! Don’t wait because many of the requirements impact client acceptance, risk assessment, management representations as well as special considerations for employee benefit plans. Also speak with your plan sponsors now and discuss the new requirements so there are no surprises.” Listen to Delahanty’s words of advice and prepare for the transition now. The year of implementation will be challenging for plan auditors; however, once the requirements are in place, the following year should not require a significant amount of additional time. Elizabeth Harper, CPA, is a member of the firm and director of quality control and EBP Audit Group at SobelCo. She is a member of the NJCPA Accounting & Auditing Standards Interest Group and can be reached at Elizabeth.Harper@sobelcollc.com.
READ MORE AUDITING ARTICLES AND RESOURCES njcpa.org/topics/auditing
LEARN MORE NOV. 12, EDISON ACCOUNTING & AUDITING CONFERENCE
NOV. 18, JAMESBURG AUDITS OF 401(K) PLANS njcpa.org/events
BECOMING A CPA
Lights, Cameras, Internships BY JOSEPH HOWE, CPA
Much to my dismay, there are no television shows about accountants. The lawyers, doctors, police officers and firefighters seem to get all the primetime glory. Even though almost all of these shows are fictionalized, by watching them you get a rudimentary idea of what those professions are about. How then are accounting students supposed to get a peek into the life of an accountant, glamorous or otherwise? Accounting is an apprentice profession. Aspiring CPAs have to work under the tutelage of a seasoned CPA before they can be licensed. Even before that, though, students have to complete minimum educational requirements. While an internship is not a required part of the undergraduate or graduate sequence of classes mandatory for certification, taking part in an internship program lets students go beyond theory and get an inside look at the daily life of a CPA and some of the exciting things that they do. What’s more, doing multiple internships can expose students to a variety of specialties that they may choose to pursue upon graduation. During an internship, students can confirm their interests, or they may discover that some of their preconceived notions about a job are different from reality. Aside from getting a look behind the curtain, so to speak, why is it worth it to pursue internship opportunities? BUILDING CRITICAL SKILLS After sitting in class after class on accounting, audit and tax, young professionals will have all the skills needed to be successful as an entry-level accountant. Wrong! This is a fallacy; one simply cannot learn everything a job will require by sitting in a classroom. Even simulations and project-based learning activities can’t serve as a replacement for the real thing. Much the same way that physicians learn by watching and doing, students will pick up critical skills during an internship by observing and
performing tasks under the guidance of experienced professionals. Interns learn the ebb and flow of office environments which is just as important— if not more important— than the technical skills that will be picked up along the way. During an internship, students will hone soft skills such as confidence, communications, time management and working independently and as part of a team, as noted in Aimee J. Pernsteiner’s The Value of an Accounting Internship: What Do Accounting Students Really Gain? These skills will not only help students land their first full-time job, they will serve them well throughout their careers.
under one’s belt definitely provides a competitive advantage. Internship opportunities come in all shapes and sizes. Those that are for college credit often run the length of the semester; some are yearlong, while others are open ended until graduation. Whether paid or unpaid, for college credit or not, all internships provide untold value for career development and future opportunities. Internships remain the only practical way for accounting students to get an inside look at the profession prior to full-time entry to practice. In the meantime, if the television networks ever hold open casting for ‘Internal Audit New Jersey,’ I’ll be there.
INVESTING IN THE FUTURE Many students have full plates and feel that they don’t have the 10 to 20-plus hours a week an internship will require. Why bother? An internship is the proverbial foot in the door to getting a full-time job upon graduation. In fact, studies have shown many accounting interns get full-time job offers with companies for which they intern. Even those who don’t land a full-time job will form a valuable network that can be used as future references and serve as a source for leads for job openings. Despite a currently saturated job market for graduates, there is still healthy competition for full-time entry-level accounting positions. Having an internship or two
Joseph Howe, Ed.D., CPA, CFE, CGFM, is the CFO of a government entity in New Jersey. He is a member of the NJCPA Governmental Accounting & Auditing Interest Group and can be reached at jhowecpa@gmail.com.
DO MORE SEARCH FOR INTERNSHIPS njcpa.org/launchpad
ATTEND CAREER NIGHT ON OCT. 1 njcpa.org/careernight
READ MORE CAREER RESOURCES FOR ACCOUNTING STUDENTS njcpa.org/career/students
NEW JERSEY CPA | SEPTEMBER/OCTOBER 2019
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BUSINESS ADVISORY SERVICES
What Accountants Need to Know About Pay Equity in New Jersey: Discovering and Addressing Pay Disparities BY KATHLEEN MCLEOD CAMINITI, ESQ., FISHER PHILLIPS LLP
When the Diane B. Allen Equal Pay Act became law on July 1, 2018, New Jersey became the state with the most progressive pay equity statute in the nation. In the year since, employers and their trusted advisors have turned their attention to the daunting task of understanding and complying with the legal mandates of this sweeping pay equity legislation. Here’s a brief look at the Equal Pay Act and an overview on how to identify and address pay disparities to avoid costly litigation. PAY EQUITY IN NEW JERSEY New Jersey’s Equal Pay Act makes it unlawful for an employer “to pay any of its employees who are members of a protected class” at a lower rate of compensation for “substantially similar work” performed by employees who are not members of the protected class. Going far beyond the federal Equal Pay Act (EPA), which simply provides equal pay protections based on gender, New Jersey’s law covers all 17 protected classes recognized by the state’s anti-discrimination statute. Consequently, the New Jersey law extends pay equality protections to race, age, religion, nation-
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al origin, marital status and pregnancy, among many other protected classifications. Absent an established seniority or merit system, New Jersey employers may only justify pay disparities if the differential is based on one or more legitimate, bona fide factors (like training, education, experience or the quantity or quality of production) and can demonstrate that those factors are job-related with respect to the position in question and based upon a legitimate business necessity where there is no alternative business practice available. Given the far-reaching financial implications of pay equity mandates in New Jersey — including the potential for costly litigation — employers have taken steps to protect themselves by conducting compensation audits to identify and remedy pay disparities. THE PAY EQUITY AUDIT Pay equity audits can be very beneficial to organizations provided they are done right. Here are some key concepts and tips for conducting or managing a successful pay audit:
SEPTEMBER/OCTOBER 2019 | NEW JERSEY CPA
• Plan ahead. It is important to identify the purpose or goals of the audit, get buy-in from senior management and put together the right team. Critical members of the team include human resources personnel, finance or payroll personnel, legal counsel and sometimes an economist or statistician to build statistical models and the pay analyses. • Examine pay practices and policies. Taking time to examine or re-examine historical and current pay practices and policies is another key step, both for purposes of establishing the correct methodology for analyzing pay and understanding and explaining pay disparities. • Collect relevant data. The relevant data for analyzing pay ordinarily includes the following for each employee included in the analysis: job title, department, job grade or level, hire date, gender (and, depending on the scope of the audit, other protected class identifiers such as race), job location, hours worked over the past 52 weeks, base wage or salary, overtime pay and bonuses or other forms of compensation.
BUSINESS ADVISORY SERVICES
• Determine employee performance. The next step is to determine who performs “substantially similar” work so that the data analysis is reviewing comparable positions. • Analyze the data. The goal of data analysis is to determine whether men and women (or other classes of protected employees) within the group are paid equally. The methodology used to make that determination can vary, depending upon the size of group and the complexity of the compensation scheme. • Assess differences. Rarely are employees who perform comparable work paid exactly the same amount. A differential in pay is justified if the employer can demonstrate that the difference is based on: a seniority system; a merit system; a system which measures earnings or quantity or quality of production; or another bona fide factor that is job related, based on business necessity, for
which there is no alternative business practice that would serve the same business purpose without producing a wage differential. • Take corrective action. Where pay differentials cannot be explained by one or more lawful justifications, steps should be taken to remedy the pay disparity. In most instances, this will require adjustments to compensation, although sometimes restructuring positions to better align responsibilities with pay is a viable (and less-costly) alternative. CPAs, accountants, consultants and compensation professionals can play an essential role when it comes to protecting an organization from expensive pay equity litigation and ensuring employees are paid equitably. Their intimate knowledge of an organization’s payroll practices and finances can provide invaluable assistance and insights when a company decides to
conduct a privileged pay equity audit to identify and address pay disparities. Kathleen McLeod Caminiti, Esq., is a partner at Fisher Phillips. As co-chair of the firm’s Pay Equity Practice Group, she regularly guides clients through the labyrinth of pay equity laws and handles employment litigation matters. She can be reached at kcaminiti@fisherphillips.com.
READ MORE EMPLOYMENT LAW ARTICLES njcpa.org/topics/employmentlaw LEARN MORE OCT. 24, ROSELAND AND ONLINE EMPLOYMENT LAW UPDATE: KEY RISKS AND RECENT TRENDS NOV. 19, ISELIN EMPLOYER’S HANDBOOK: LEGAL, TAX AND HEALTH CARE ISSUES njcpa.org/events
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NEW JERSEY CPA | SEPTEMBER/OCTOBER 2019
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CORPORATE ACCOUNTING
Managing the Business in Good Times and Bad: Is There a Difference? BY MITCHELL SHARPE, CPA, SKC & CO. CPAs, L.L.C.
It helps to recognize early that life and business tend to move along in the form of a sine wave. Over time, there are peaks and valleys. Count on it. With that in mind, how can a business best be managed through the ups and downs? KNOW YOUR DATA Focus on continually having timely, accurate data about your business, keeping in mind that the economy will clearly influence this. All companies should review their metrics and trends on at least a monthly basis. A good monthly closing of the books is critical, but that’s just the beginning. The resulting data should be strategically analyzed on a timely basis, and key performance indicators should be tracked. For instance, if there is “creep” in the gross profit percentage, is it because something in the company’s operation has changed or are external forces at work (or both)? If the latter is true, it could be an indicator that the company is facing the down side of the sine wave. This information can prove to be invaluable. The earlier that management can be alerted to an imminent change in conditions, the less likely it is that the company will suffer significantly. BE PROACTIVE With the sine wave in mind, it is clear that constant, proactive planning is a strategic advantage. In good times, there is an opportunity to realize profit. Be conscious of the opportunity to build company net worth and cash reserves. A budgeting process should include provisions for this. Have a specific target for the amount of after-tax dollars that should be left in the company. When times and cash flow get tougher, the company will be in a position to retain great people, maintain culture and continue to separate itself from other industry competitors. Create a “plan B.” The time to consider your alternatives is when things are
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going in the company’s favor. Give some thought to these “what-ifs” now. The team should take its time and have a thorough and honest discussion. Address how the company might do more with less, how assets could be leveraged in a different way, and assure the team that thought is being put into the company’s (and hence their) future. Cash flow planning should be continually updated. When times are good, arrange for a business line of credit at the bank, as the company is more likely to get a positive response to that request when the economy is good and the company is doing well. Be sure that collections procedures are tight. Have an organized, consistent process so that the company will not be on the bottom of its customers’ payment list. Finally, consider having some alternate sources of capital if the need arises. This may well be in the form of personal capital that is contributed to the business when cash is less abundant. DEVELOP BEST PRACTICES Here is a final thought that perhaps relates to the title of this article (is there really a difference?). Consider that the same behaviors should be performed at all points on the wave. A company with an overall strong business model and culture will tend to be relatively prosperous in good times and bad. Here are some best practices to consider: • Recruit 24/7. A company will always need to find great people. • Maintain a strong culture. This will not only attract great people, but will help retain them. If times are tough, some of the points discussed above (e.g., planning and culture) will aid in staff retention. • Always be sales focused. A company with a great value proposition and extraordinary talent that does not
SEPTEMBER/OCTOBER 2019 | NEW JERSEY CPA
have a strong sales process will ultimately struggle, especially when external forces are working against it. When the economy begins to slow, the advantage will go to those companies that are ahead of the curve with respect to sales processes. Keep those processes sharp, creative and consistent. • Continually innovate. This will differentiate one company from another. Mitchell Sharpe, CPA, MBA, is the founder of SKC & Co. CPAs, LLC. He is a member of the NJCPA and can be reached at msharpe@skcandco.com.
LEARN MORE SEPT. 16, ROSELAND CRITICAL THINKING FOR FINANCE
SEPT. 25, ROSELAND THE STRATEGIC CFO: BIG PICTURE SKILLS
OCT. 17, ISELIN CFO/CONTROLLER’S ROADMAP TO ORGANIZATION SUCCESS WITH INTEGRATED PLANNING, BUDGETING AND FORECASING
OCT. 25, MOUNT LAUREL CFO FORUM: BUDGETS AND PROJECTIONS njcpa.org/events
PROFESSIONAL ISSUES UPDATES IMPACTING CPAs AND FINANCIAL PROFESSIONALS Attend this important webcast to stay on top of the latest changes in New Jersey’s accounting and business climate and be ready for the future.
Thursday, September 19, 12-1 p.m. Replays on September 25 (12-1 p.m.) and September 27 (12-1 p.m.) REGISTER FOR THIS FREE EVENT AT NJCPA.ORG/ISSUESWATCH
Hear the latest legislative developments impacting CPAs and the business community. Listen in bi-weekly.
Subscribe now. Go to njcpa.org/podcast to learn more.
FIRM & PRACTICE MANAGEMENT
Finding and Leveraging Today’s Interns for Tomorrow’s Success BY ROBERT TRAPHAGEN, CPA, CGMA, TRAPHAGEN FINANCIAL GROUP
While hiring recent graduates has always been an important part of accounting firms’ recruitment strategies, it has now become a critical component of many firms’ success. Developing a successful internship program requires careful planning, time and dedication. Today’s top accounting students are seeking meaningful connections and tailored career plans. A recent Rider University study confirmed that students’ internships were valuable learning experiences which enhanced both their personal and professional maturity, providing a transitional bridge from school to the workplace. To identify and attract the best interns, firms should develop a strong recruitment strategy that consists of the following three steps: 1. Promote the firm’s brand 2. Build relationships 3. Connect
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PROMOTE THE FIRM’S BRAND Accounting firms must promote their brand online through their website and social media networks. And engaging students with free swag and attending campus events helps too. A firm’s website is often the first place that a potential candidate will visit to learn about the firm, its culture and its opportunities. Connect with students using LinkedIn and other social media professional networks and engage with them online. The firm can also leverage the skills and interests of existing interns in its recruitment efforts. For example, Nicole-Lynn Garcia, an accounting intern at our firm and a recently appointed college ambassador, demonstrated an interest in social media. This interest allowed her to create an “intern take over” video. Our interns were able to share their experiences via social media,
SEPTEMBER/OCTOBER 2019 | NEW JERSEY CPA
which allowed us to promote our firm. The video was a huge success! BUILD RELATIONSHIPS Building strong relationships with local colleges and universities — and the NJCPA — is vital to reaching students early in the recruiting process. Our firm believes in giving back to our community and in the personal development of our associates. Both of these were achieved by partnering with the NJCPA scholarship program. As members of the NJCPA Student Programs & Scholarships Committee, our associates and our interns are directly involved in reviewing resumes and applications for potential college scholarships and mentoring scholarship recipients. The scholarship program provides us with the opportunity to network with the best and the brightest
FIRM & PRACTICE MANAGEMENT
who have demonstrated a high level of academic achievement in school. The initial success of this program led us to establish our college ambassador program. CONNECT Involve younger associates. Recruit through your interns. Chances are they have strong connections with the colleges they are attending and can recommend like-minded peers. This is the most effective way of finding talent. One of our associates, Steven Budryk, MS, and a CPA candidate, was originally offered an internship through one of our college ambassadors. Through his internship, Steven continued to expand his knowledge by working directly with our accountants on monthly and quarterly accounting and assisting with the preparation of tax returns. He then became a college ambassador, where he directly
referred interns to us. Steven was identified as a potential hire for his eagerness to learn, attention to detail and professionalism; he recently accepted a permanent position with the firm. Our interns also serve as members of our recruitment committee. Our newest designated college ambassador is building relationships and connecting with teachers and professors. She has identified future opportunities for the firm to find talent within the university’s accounting societies, financial planning clubs and professional enrichment programs; this strategically supports our advisory services platform. The more active and visible the firm is, the more opportunities it will have to promote its brand, build relationships and connect with future leaders. A wellestablished recruiting program will attract talented, ambitious students and provide the opportunity to hire the best and bright-
est; not only for the future of the firm but for the benefit of the profession. Robert Traphagen, CPA, CGMA, is the managing partner of Traphagen Financial Group. He is a former president of the NJCPA and its Bergen Chapter, and is a member of Accounting & Auditing Standards Interest Group and a trustee of NJ-CPA-PAC. He can be reached at robert@tfgllc.com.
DO MORE PROMOTE YOUR INTERNSHIPS njcpa.org/launchpad
EXHIBIT AT CAREER NIGHT ON OCT. 1 njcpa.org/careernight
READ MORE STAFF RECRUITMENT AND RETENTION ARTICLES njcpa.org/topics/staff
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NEW JERSEY CPA | SEPTEMBER/OCTOBER 2019
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GOVERNMENTAL & NONPROFIT
Complying with New Nonprofit Reporting Standards BY BRIGID D’SOUZA, CPA, AND LORI BUZA, ESQ., SAINT PETER’S UNIVERSITY
When new reporting standards are released, CPAs must assist their nonprofit clients or employers in adapting to the changes in order to comply with the law and his or her professional responsibility. The CPA has a duty to understand the new rules, and, depending on the scope of responsibility, to aid the nonprofit in adapting to those rules. AICPA CODE OF PROFESSIONAL CONDUCT The AICPA Code of Professional Conduct requires CPAs to exercise due care, meaning that he or she must: • Observe the profession’s technical and ethical standards • Commit to learning and professional improvement to ensure a mastery of the services discharged • Be diligent in discharging responsibilities to clients. Thus, in exercising due care, CPAs must understand and adapt to new reporting rules with respect to their nonprofit clients or employers. This includes advising the nonprofit in written terms, such as in the engagement letter or as defined pursuant to the role that the CPA has within the organization (e.g., if the CPA is employed by the nonprofit in an accounting or financial role). TECHNICAL STANDARDS AND GUIDANCE It is essential that CPAs keep current with technical standards and guidance to understand the baseline rules, any subsequent changes and the gap that a client or employer must then bridge to ensure go-forward compliance. Key considerations the CPA should discuss with the nonprofit include potential impact to both internal and external processes and formulation of a communications plan. FINANCIAL ACCOUNTING AND REPORTING The Financial Accounting Standards Board’s ASU 2016-14 — “Topic 958: Presentation of Financial Statements of Not-for-Profit
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Entities” is one example that illustrates a CPA’s duty. This new rule was enacted to improve reporting around net asset classification requirements presented in both the financial statements and the notes to the financial statements. It aimed to provide better disclosure around the nonprofit’s liquidity, financial performance and cash flows. ASU 2016-14 requires changes to the financial statements and the notes. Here are some questions that CPAs should consider and discuss with nonprofit staff when adapting to a new reporting rule: • Do accounting systems require updating to track data in a manner and method that supports new disclosures? • Are all requisite stakeholders (e.g., management, staff, volunteer support staff, board trustees) impacted by the new rule in terms of work process? • If stakeholders’ processes are impacted by the new rule, is there a training and implementation plan in place to ensure that the nonprofit can migrate to the new rule and ensure compliance? • Does the new rule impact the financial reporting in such a way that board trustees must be educated as to the purpose and the resulting impact of the change? • Is nonprofit management aware of the cost-benefit ratio of adapting to the new rule, including investments needed to create new, or adapt existing, business process, as well as penalties of noncompliance to the new rule? The CPA’s responsibilities will vary depending on the scope and nature of the issue with the employer or client. FEDERAL TAX REPORTING In addition to financial reporting standards, the CPA should be cognizant of any potential tax reporting impact. Nonprofits must adhere to annual filing mandates to maintain tax-exempt status, as well as the applicable Form 990 to report annual activity. For instance, in May 2017, the AICPA Tax Executive Committee sent a notice to the IRS with proposed changes
SEPTEMBER/OCTOBER 2019 | NEW JERSEY CPA
to Form 990 based on ASU 2016-14. The 2018 Form 990 instructions referred to ASU 2016-14, but the form itself was not yet updated to reflect the AICPA’s proposed changes. The CPA should take care to both understand a rule change as well as the purpose of it. This may help stakeholders of the nonprofit understand the costs and benefits of the changes required to be in compliance with the new reporting standards. At the same time, the CPA ensures compliance with his/her duty and professional responsibility. Lori A. Buza, J.D., is an attorney at law, N.J. & D.N.J Cts., chair of the Department of Accountancy & Business Law and full professor of business law at Saint Peter’s University. Brigid D’Souza, CPA, MBA, is an assistant professor in the Department of Accountancy & Business Law at Saint Peter’s University.
READ MORE NONPROFIT ARTICLES AND RESOURCES njcpa.org/topics/nonprofit
LEARN MORE OCT. 28, ISELIN GOVERNMENTAL AND NOT-FOR-PROFIT ANNUAL UPDATE DEC. 3, ISELIN ACCOUNTING AND REPORTING FOR NOT-FOR-PROFIT ORGANIZATIONS njcpa.org/events
PROFESSIONAL DEVELOPMENT
5 Tips for Networking Newbies BY NICOLE DEROSA, CPA, MAcc, WITHUMSMITH+BROWN
Networking: a 10-letter word that many accountants don’t necessarily learn the value of until later in their career. The catch here? Networking starts early on in one’s career, similar to planting a seed, watering that seed and watching it flourish into a beautiful plant. Making the decision to start networking can feel a little overwhelming — the hardest part is first planting the seed. The rest is easy! How you prepare for your meetings and conversations can be equally as important as your delivery. Confucius hit the nail on the head when he said, “Success depends upon previous preparation, and without such preparation there is sure to be failure.” With that being said, let’s start planting that seed. Here are some tips: 1. Practice makes perfect. Grab a colleague to practice your networking skills. Take note of your voice inflections, the volume and the pace. Do you tend to speak in a monotone voice? Does your voice fade when a sentence is ending? Do you find yourself using excessive filler words? It’s also very important to make sure your non-verbal communication agrees with the verbal elements and vice-versa. Try standing in front of a mirror and practicing your eye contact, gestures and posture; you might catch yourself unknowingly using excessive hand gestures or even slouching. 2. Do your research. Know your audience, as well as the time and location of the event. If an attendee list is made available in advance of the event, review it and identify people you want to seek out (keeping in mind quality over quantity). If you are an introvert, try arriving early for a chance to engage in more one-onone conversations with a few attendees before things get hectic. Another tip for my fellow introverts — use the buddy system and attend the event with a colleague. In addition to knowing the audience, time and place of the event, you should make sure you know what to wear — you don’t want to be that person who arrives late and underdressed.
3. First impressions set the stage, and you only have a few moments to capture someone’s attention — so make sure it’s a good one! Who you are, what services you can offer and what you’re seeking are typically the three bases you’ll want to cover in less than 30 seconds. Depending on the setting or situation, this “pitch” can be modified, however it’s always very important to communicate these items upfront. 4. Don’t forget your business cards. Keep a safety stash in your car or add a few extra to your wallet to ensure you don’t show up to the event empty-handed. Exchanging business cards at networking events can often be extensive. In order to keep things straight after a business card exchange, put a trigger word on the back of the card so later you will have something to remind you of your conversation with them. If by chance you neglect to bring business cards, have no fear! We are fortunate to live in a world where social media websites, such as LinkedIn, are very common. 5. Follow up. Last but not least, make sure you follow up after the event. Reach out to your new contacts via email or
connect on LinkedIn within a couple of days. When you reach out, be sure to personalize your message and include something specific that was mentioned during your interaction — this is where the trigger word on the back of the business card can really be helpful! Continue to stay in touch with your contact whether it is over email exchanges, a coffee or at future events. Make sure you water that seed, and watch it flourish. Nicole DeRosa, CPA, MAcc, is a tax manager at WithumSmith+Brown. She is a member of the NJCPA Federal Taxation Interest Group, Emerging Leaders Council and Emerging Leaders Interest Group. Nicole can be reached at nderosa@withum.com.
READ MORE RESOURCES FOR EARLY-CAREER ACCOUNTING PROFESSIONALS njcpa.org/career/early
LEARN MORE DEC. 16, ROSELAND AND ONLINE VALUE OF COLLABORATION — THE ART OF RELATIONSHIP MANAGEMENT njcpa.org/events
NEW JERSEY CPA | SEPTEMBER/OCTOBER 2019
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TAX
Beyond Mandatory Repatriation and Corporate Rate Change Considerations BY ROBERT A. TRENERY JR., CPA, KPMG LLP
Despite the possible simplification intentions of the Tax Cuts and Jobs Act (TCJA) of 2017, income taxes for corporations are as complex as ever, and, therefore, so are the accounting for income taxes (AIT) considerations. Whether it be under U.S. GAAP ASC 740 or International Financial Accounting Standards (IFRS) IAS 12, the nuances are many and potential missteps lurk at every corner. Beyond the mandatory repatriation and corporate rate change, companies of all sizes need to be aware that their AIT process may be much more complicated and that many of the decisions they made in 2017 and 2018 will impact them for years to come. GILTI One example relates to global intangible low-taxed income (GILTI). Companies made an election under ASC 740 to either apply deferred tax treatment or period cost treatment for temporary differences impacting the GILTI calculation. Many public and private companies grappled with this decision over the course of 2018
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since a commitment one way or another had to be made within one year of the enactment of TCJA. Tracking GILTI-based deferred tax assets (liabilities) on foreign controlled corporations may prove to be a daunting task for complex and simple corporate tax structures alike. However, the other accounting policy choice would be essentially permanent tax treatment and the effective tax rate inconsistencies that come along with period cost treatment often necessitating additional clarifying disclosures. The result of this accounting policy choice will now be part of the annual income tax provision process. That reality adds complexities and puts in place a method of accounting that the company must abide by prospectively. The issues and nuances do not stop here. There is the impact on a company’s foreign unremitted earnings assertion with respect to investments in controlled foreign corporations and whether it meets the criteria for indefinite reinvestment. While portions of foreign earnings may generally be subject to U.S. federal taxes when generated,
SEPTEMBER/OCTOBER 2019 | NEW JERSEY CPA
currently there can be additional U.S. federal consequences and local country withholding taxes that are incurred upon a remittance. OTHER CONSIDERATIONS Other considerations include (but are not limited to) the base erosion and anti-abuse tax (BEAT), interest deductibility and any limitation with the application on Internal Revenue Code section 163(j) and differing or varying state income tax treatment for certain of these items. As the Treasury Department issues new regulations and other guidance, there will also need to be a reassessment of tax positions for which there is uncertainty along with any associated unrecognized tax benefits. Tax positions will also need to be assessed under the guidance on uncertainty in income taxes as companies look to implement restructurings and other tax-planning actions to address the overall consequence of the TCJA. Ancillary AIT impacts that are not a direct result of the TCJA could otherwise be affected. For example, as a result of the new landscape, a company may
TAX
require review of related-party transaction documents and section 162(m) review of stock agreements. Not only may there need to be additional levels of review, the qualifications of personnel involved in the process may need to be reassessed to determine if they have the appropriate experience and training. By working closely with their tax and accounting advisors and auditors, companies can help assure they are managing the appropriate financial statement impact of the TCJA, both now and in the future. Robert A. Trenery, Jr., CPA, is a tax partner at KPMG LLP. He is a member of the NJCPA and can be reached at rtrenery@kpmg.com.
choose to reassess its inter-company transactions and related transfer pricing policies to manage the impact associated with BEAT. With all of this in mind, companies may need to consider new or expanded
income tax controls and processes as a result of the TCJA. The complicated calculations associated with GILTI, BEAT and foreign-derived intangible income may require extraction of underlying financial data from foreign subsidiaries. BEAT may
READ MORE FEDERAL TAX ARTICLES AND RESOURCES njcpa.org/topics/fedtax LEARN MORE OCT. 23, ROSELAND AND ONLINE; NOV. 18, MOUNT LAUREL ANNUAL TAX UPDATE: CORPORATIONS AND PASS-THROUGH ENTITIES OCT. 25, ISELIN SURGENT’S FEDERAL TAX CAMP njcpa.org/events
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NJCPA NEWS
NJCPA OVATION AWARDS HONOR SUPERSTARS WHOSE EXEMPLARY EFFORTS AND STELLAR ACHIEVEMENTS ARE ADVANCING NEW JERSEY’S ACCOUNTING PROFESSION.
The awards celebrate the high achievers who are emerging leaders, innovators, champions of diversity, educators, volunteers, notable women and other individuals who have made a substantial impact in accounting. READ MORE ABOUT THE RECIPIENTS AT NJCPA.ORG/AWARDS
DIVERSITY, EQUITY & INCLUSION Honoring the champions of diversity, equity and inclusion who work passionately to make the accounting and finance profession open, welcoming and fair to encourage and promote initiatives and change, regardless of race, sexual orientation, religion, age, gender, disability status or other dimension of diversity.
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SANDRA S. EMMERT, CPA FINANCIAL CONTROLLER, SAMUELS INC.
Having overcome several obstacles to becoming a CPA, Sandra is a role model for prospective accountants and CPAs. She works tirelessly to help her customers understand their financial statements and bookkeeping. As the only female in management, Sandra has helped the company restructure office procedures and helped open two new store locations.
SEPTEMBER/OCTOBER 2019 | NEW JERSEY CPA
EVELYN A. McDOWELL, CPA, PH.D. ASSOCIATE PROFESSOR, RIDER UNIVERSITY
Evelyn serves as faculty liaison to Rider’s Aspiring Accounting Professionals Program, which helps address diversity in accounting. She also is president and founding board member of the Sons & Daughters of the United States Middle Passage, a lineage society dedicated to preserving the memory and history of the artifacts and landmarks of slavery.
EMERGING LEADERS Recognizing savvy superstars who have been working in the accounting profession 10 years or less and have had noteworthy professional accomplishments; combined personal and professional achievements that merit special recognition; and/or actively participated in the advancement of the profession or NJCPA.
JOSEPH H. DOERRER, CPA, PFS, CFP SENIOR TAX ASSOCIATE, BESSEMER TRUST COMPANY, N.A.
Joe has become a trusted resource at his firm, where his knowledge of taxation and financial planning make him a great asset. He was a 2018 winner of the AICPA Standing Ovation Award in the area of personal financial planning and was a 2018 Wolters Kluwer/CCH Emerging Leader honoree.
JOSE M. BORBON, CPA ASSISTANT VICE PRESIDENT, SENIOR AUDITOR, KEARNY BANK
ZACHARY B. COHEN, CPA
SENIOR AUDITOR, PRUDENTIAL FINANCIAL INC.
JOHN C. DISPENZIERE JR., CPA
AUDIT MANAGER, DELOITTE
Jose leads by example in the community and in his bank. In partnership with his alma mater, Passaic County Technical Institute, he volunteers his time to talk with students about career opportunities in accounting and community banking. As one of the youngest officers at his bank, he works closely with management in implementing the new CECL accounting standards as well as enhancing his assigned audits.
Working together with fellow NJCPA member Melissa A. Dardani, CPA, Zach helped direct a four-part action plan for the NJCPA Board of Trustees to better understand the burdens of student loan debt. Along with Melissa, he is drafting guidance for New Jersey State Assemblyman Gary Schaer for student loan legislation and to create online financial literacy.
Changing student perceptions about accounting and inspiring the next generation has been a passion of John’s. For the past six years, he has been an NJCPA Career Awareness Program presenter at multiple New Jersey high schools and has encouraged many students to pursue an accounting education.
KERRY M. DUDA, CPA
JEREMY I. KAYE, CPA
MEGAN T. KELLY, CPA, CFE
Kerry has a drive to excel — both inside and outside of the firm. This past year, she stepped into the role of being the primary go-to HUD person at her firm, and she previously started the Women in Business Group. At the NJCPA, she is a student mentor and Technology Chair of the Bergen Chapter.
In his four years at the firm, Jeremy has been a star performer. He is a member of the Deloitte New Jersey Junior Talent Counsel and was a founding member of the firm’s NextGen marketplace. Outside of the firm, he is the founder of the Young Professional Advisory Committee to the Board of Trustees at Cancer Hope Network.
SENIOR STAFF AUDITOR, WILKINGUTTENPLAN
AUDIT SENIOR, DELOITTE
MANAGER, SOBELCO
Megan is, simply put, a leader. Others routinely turn to her for advice, guidance and good counsel. At Sobel, she manages some of their most sophisticated cases and works independently on the engagements. At NJCPA, she serves on the Content Advisory Board and was a 2018 Volunteer Award recipient.
NEW JERSEY CPA | SEPTEMBER/OCTOBER 2019
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NJCPA NEWS
SHAUN F. MALONEY, CPA APV, CFF, CGMA, CFA
MICHAEL J. MASSOOD, CPA
KERI L. MULLIN, CPA, MBA
Recognizing Shaun’s unique combination of technical knowledge, leadership skills and core values, EisnerAmper made him the youngest director in its Forensic, Litigation & Valuation Services practice. He is the chair of the NJCPA Forensic & Valuation Services Interest Group and won a Standing Ovation Award from the AICPA.
Described as having a willingness to volunteer at the drop of a hat, Mike has earned the title of emerging leader. He actively works to bring in new NJCPA members and has successfully run functions in order to attract others to the organization. He has held various leadership roles at the Passaic County Chapter and is currently the chapter’s president.
From recruiting to presenting at universities, Keri is committed to assisting the next generation of accounting professionals. She led the initiative for the Young Professionals Networking and the Real Estate Next Generation groups at WilkinGuttenplan. Keri is passionate about speaking publicly about the CPA profession.
DIRECTOR, EISNERAMPER LLP
PARTNER, MASSOOD & COMPANY, P.A.
SENIOR ACCOUNTANT, WILKINGUTTENPLAN
SobelCo Has You Covered! 2019 Emerging Leader
CONGRATULATIONS! MEGAN KELLY, CPA
Manager Forensic and Valuation Services
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SEPTEMBER/OCTOBER 2019 | NEW JERSEY CPA
@Sobel_Advisory | SobelCoLLC.com | 973-994-9494
EXCEPTIONAL EDUCATORS Recognizing full-time college accounting educators who distinguish themselves with their excellence in teaching and prominence in state-wide or regional activity to actively encourage careers in accounting and by serving as role models in academia.
JOHN F. BOYLE, CPA, MBA
ASSISTANT PROFESSOR OF BUSINESS STUDIES, STOCKTON UNIVERSITY
Known for his charismatic teaching style, John assists students both inside and outside the classroom. Described by students as a “walking encyclopedia of knowledge,” John actively encourages students to consider accounting careers. He created a workshop on tax law updates and routinely brings real-world examples into the classroom.
JEFFREY CHRISTAKOS, CPA/PFS, MBA, CFP
CHAIR, ACCOUNTING DEPARTMENT, MONMOUTH UNIVERSITY
As a college professor, Jeff encourages students to be their best and works to continually make improvements to the school’s accounting program. He created a Financial Planning Club and started the school on the path to having a Certified Financial Planning Board-approved program. He was selected to be the first nonPh.D. department chair in recent history of the Leon Hess Business School.
JOSEPH A. LIZZA, CPA, MBA, CGMA
BARRY R. PALATNIK, CPA, PH.D., MBA
RAYMOND C. RIGOLI, CPA-
Joseph’s passion for teaching, love for the craft and knowledge base are unmatched. He prioritizes his students in the classroom and in gaining real-world experiences. Joseph is an IRS-certified Volunteer Income Tax Assistance (VITA) program site coordinator. He has won several awards, including Teacher of the Year from Rutgers and the Dean’s Award for Teaching Excellence from Fordham.
Barry has proven how valuable he is to his students and the NJCPA. Both in and out of the classroom, he has tremendous impact on his students. As part of his commitment to continuously provide exposure to different accounting careers, he created a daylong simulation of a mock criminal investigation for Stockton students.
IN MEMORIAM For more than 35 years, Ray was a role model for New Jersey accounting professionals, professors and students alike. He initiated the accounting internship program and co-developed the accounting curriculum at the school. His contributions to students, professors and New Jersey educational institutions will be felt for many years to come.
ASSISTANT PROFESSOR, FELICIAN UNIVERSITY
ASSISTANT PROFESSOR OF ACCOUNTING, STOCKTON UNIVERSITY
FORMER CHAIR, ACCOUNTING DEPARTMENT, RAMAPO COLLEGE OF NEW JERSEY
NEW JERSEY CPA | SEPTEMBER/OCTOBER 2019
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NJCPA NEWS
IMPACT Recognizing those who dedicate meaningful time and energy to any of the following commendable endeavors: giving back to the community; sharing professional expertise to support others; or advancing the interests and needs of the accounting profession through active engagement, leadership or advocacy.
MELISSA A. DARDANI, CPA SENIOR, EISNERAMPER LLP
From cannabis to forensics and helping accounting students, Melissa makes a considerable contribution to the profession. She has been instrumental in drafting a position paper for NJCPA on tax-related changes needed for cannabis legislation and testified in Trenton. She also helped lead a team at the NJCPA to draft position papers on legislation to provide relief for student debt.
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KAREN A. ARTASANCHEZ, CPA
JOSEPH A. BALDOMERO JR., CPA
DANIEL BARBERA, CPA, MBA, CGMA
Karen is an inspirational leader at her firm, having the ability to connect with all levels. She has also been invaluable in her role on the NJCPA State Taxation Task Force and has provided recommendations for various legislative initiatives, including helping to review and draft the pass-through entity bill.
Joseph has been appointed to a five-year term on the Board of Trustees of the Interest on Lawyers Trust Accounts (IOLTA) Fund of the Bar of New Jersey, which awards grants to fund free legal services to low-income people. He also has almost 40 years of service to the NJCPA and is a past president of the Hudson Chapter.
In the literal sense of the award, Dan has made a huge impact on Stockton University accounting students. Last year, Dan financially supported 10 Stockton students to attend the NJCPA Annual Convention & Expo — a move that forever changed the lives and careers of these students.
MICHAEL H. KARU, CPA, CFF, CGMA
ANTHONY C. PLAKIS JR., CPA
CARL SPECHT, CPA, CGMA
Tony has advocated for joining the NJCPA for more than 30 years. He continues to dedicate himself to growing the Society’s Southwest Jersey Chapter, where he is the treasurer. Tony actively works to set up seminars and helps members achieve their CPE credits.
Carl has touched the lives of many NJCPA Hudson Chapter members. Described as someone who is willing to help in every way, Carl has held various positions in the chapter, including president, and is currently a director. He is a member of the NJCPA Student Programs & Scholarships Committee, Federal Taxation Interest Group and State Taxation Interest Group, among others.
SHAREHOLDER, WILKINGUTTENPLAN
MEMBER, LEVINE, JACOBS & COMPANY, LLC
Michael led Levine, Jacobs & Company from a firm of eight and a gross of under $1 million to a total of 27 employees and a gross of over $5 million. He is also civic-minded, having served as a board member on the New Jersey Ballet Company and was a trustee, officer and audit chairman of Oheb Shalom Congregation. He is also an active member of the Rotary Club of West Orange.
SEPTEMBER/OCTOBER 2019 | NEW JERSEY CPA
SHAREHOLDER, SUAREZBALDOMERO, PA
SENIOR ACCOUNTANT, CENTRIC DISTRICT MANAGER, ADP
CFO, LYDIA SECURITY MONITORING, INC.
MANAGING MEMBER, CONSTANTINO, SPECHT, TEMPLETON & CO., LLC
INNOVATION MICHAEL A. STILLITANO, CPA
JULIE STROHLEIN, CPA
Mike has a long-standing commitment to the NJCPA and was a 2016 recipient of its Distinguished Service Medallion. He is an active member and past president of the Monmouth/ Ocean Chapter and is chairperson of the Chapter Operations Committee. He currently leads a team of 110, responsible for treasury, finance, accounting and tax.
Julie routinely gives back to the community around her. She is a member of the local board of the United Way of Greater Philadelphia & Southern New Jersey and has served as a mentor for Women United and Girls Today Leaders Tomorrow programs. She is also a frequent presenter at her firm’s academy workshops.
SVP-BUSINESS ADMINISTRATION AND FINANCE, CFO REGION NORTH AMERICA, HAPAG-LLOYD LLC
ASSOCIATE PARTNER, ALLOY SILVERSTEIN ACCOUNTANTS & ADVISORS
Honoring those who are transforming accounting at lightning speed: driving innovation of all kinds, as it relates to accounting — leveraging new technologies, using forward-thinking data analytics strategies, implementing alternative business models or rolling out experimental engagement strategies to improve employee culture.
JAMES C. BOURKE JR., CPA/CITP, CFF, CGMA MANAGING DIRECTOR, ADVISORY SERVICES, WITHUM
Jim is recognized for his significant advances in the technological and digital space. In 2019, he won the NJBIZ Digi-Tech Innovator Award for enhancing overall productivity and performance at his firm. Jim has been an invaluable member of the NJCPA since 1988, having been a past president and a former Monmouth/Ocean Chapter president.
NEW JERSEY CPA | SEPTEMBER/OCTOBER 2019
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NJCPA NEWS
MATHEW LANGENBERGER, CPA TAX ACCOUNTANT, WILKINGUTTENPLAN
Having developed a deep skillset in Excel and data manipulation, Mat embraces technology as a tool to create efficiency and consistency. He is an active member of the firm’s Innovation Council and promotes change and innovation throughout the office. He applies his skills to numerous projects, such as an authorization form/note generator and tax and time tracking worksheets.
JOSEPH A. MCGRATH JR., CPA
SEAN STEIN SMITH, CPA, PH.D., DBA, CMA, CGMA, CFE
AUDIT SENIOR MANAGER, DELOITTE
ASSISTANT PROFESSOR, LEHMAN COLLEGE
Joe’s commitment to helping others is unparalleled. He has brought new meaning to what a mentor should be by raising the bar on creating new ways to engage, from meeting students in person when home from school breaks to helping them secure employment.
As the newly appointed leader of the NJCPA Emerging Technologies Interest Group, Sean recognizes the importance of focusing on blockchain and other emerging technology platforms. He has helped shape content for the NJCPA and educate members and the general public about blockchain and cryptocurrency applications for accounting and finance.
The WilkinGuttenplan Family Congratulates Our NJCPA Ovation Award Winners!
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Karen Artasanchez Impact Award
Kerry Duda Women to Watch
Keri Mullin Emerging Leader
Mat Langenberger Innovation Award
732.846.3000 | wgcpas.com NEW JERSEY I NEW YORK CITY 30
SEPTEMBER/OCTOBER 2019 | NEW JERSEY CPA
LIFETIME LEADER Celebrating the standout NJCPA member of exceptional merit for remarkable contributions to the accounting profession over the course of their career.
HOWARD J. BOOKBINDER, CPA OWNER, HOWARD J. BOOKBINDER, CPA
Few people embody what it means to be a CPA more than Howard. Always willing to help, explain tax issues or lend an ear, Howard is an integral part of the NJCPA and the Bergen Chapter. He has been an invaluable liaison to the IRS and authored Bergen Record’s Tax Mailbag column as well as his own books.
WOMEN TO WATCH Applauding the growth and success of female NJCPA members for their leadership, potential, contributions and/or commitment to fostering the success of their colleagues.
REGINA C. BALAGTAS, CPA
NICOLE M. DEROSA, CPA
ANDREA DIAZ, CPA, ABV, MST
As a rising superstar at Citrin Cooperman, Regina forges beyond the scope of assigned work to deepen her industry expertise. Specializing in audit services, Regina has been described as a “consummate professional.” She is actively involved in NJCPA’s Mentor Program, where she is focused on cultivating the talent that will support the future of the profession.
Since being an NJCPA scholarship recipient in 2008, Nicole’s contribution to the accounting profession has been extensive. She was an NJCPA “30 Under 30” award winner in 2015, is the vice chair of the Emerging Leaders Council and is on the Content Advisory Board. In addition, she was an adjunct professor at Raritan Valley Community College and is a frequent speaker on tax.
Andrea continually inspires her staff, clients, coworkers and those in the community. She serves on the executive committee of the Morris County Chamber of Commerce’s Women in Business program and was selected as the accounting/tax expert for their “Ask the Expert” panel. Andrea was also recognized as an “Outstanding Coach” for the Girls on the Run charity program.
SENIOR, CITRIN COOPERMAN & COMPANY, LLP
TAX MANAGER, WITHUM
MANAGER, SKC & CO. CPAs LLC
NEW JERSEY CPA | SEPTEMBER/OCTOBER 2019
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NJCPA NEWS
DANIELLE DVORAK, CPA SENIOR TAX MANAGER, FRIEDMAN LLP
As a member of the NJCPA Emerging Leaders Council and Strategic Planning Committee and director of the Bergen Chapter, Danielle is truly dedicated to the NJCPA and the accounting profession. She also gives back through volunteering at the Volunteer Income Tax Assistance (VITA) project, Habitat for Humanity, Community Food Bank and others.
DEIRDRE HARTMANN, CPA PARTNER, NISIVOCCIA LLP
Deirdre recognized healthcare as a huge business opportunity and successfully built the healthcare segment at her firm from the ground up and. In 2018, she brought new business into the firm by acknowledging the need for outsourced accounting services. She is a frequent lecturer on tax business efficiency, revenue cycle analysis and analyzing physician contracts.
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SEPTEMBER/OCTOBER 2019 | NEW JERSEY CPA
VANESSA MUNOZ, CPA AUDIT SUPERVISOR, WISS & COMPANY, LLP
Vanessa possesses leadership qualities at Wiss and in the community. She is active in the Wiss Women’s Leadership Forum where she promotes and encourages the advancement of women within the firm. She is also on the board of Mrs. Wilson’s House, a nonprofit that assists women in recovery from substance abuse.
ANDREA NODORO, CPA
AUDREY J. SHERRICK, CPA
JUNE M. TOTH, CPA
In addition to her fast rise to leadership at her firm, Andrea served for several years as treasurer of the NJCPA Morris/Sussex Chapter. She gives back to the community through her participation on the Advisory Council for Dress for Success Morris County, a not-forprofit organization that promotes the economic independence of disadvantaged women.
In a career spanning more than four decades, Audrey has established herself as an indispensable resource to clients. She has shown a great commitment to the NJCPA, having served as a member of the Board of Trustees, chair of the NJCPA Audit Committee, past president of the Atlantic/Cape May Chapter and a member of the chapter’s scholarship committee.
June has become a resource for many NJCPA members, who consider her a sounding board on topics from accounting to overall life decision-making. Her involvement in various NJCPA committees and groups, and her ability to encourage others to be involved (and have fun while doing it), is a quality that everyone should aspire to have.
TAX SENIOR MANAGER, UNTRACHT EARLY LLC
PARTNER, FRIEDMAN LLP
MANAGING MEMBER, ZBT CERTIFIED PUBLIC ACCOUNTING & CONSULTING, LLC
NEW JERSEY CPA | SEPTEMBER/OCTOBER 2019
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NJCPA NEWS
Kickball Tournament a Success NJCPA members from all backgrounds and with varying skillsets descended upon the ISP Sports Center in Randolph on July 17 for the ninth annual NJCPA Kickball Tournament. True to form, the games were intense and highly competitive. CohnReznick won first place — holding the title for the third year in a row. Deloitte was runner up. Thirteen teams competed for the trophy — and bragging rights. The winner gets to hold the Tournament Cup for one year. Each team played at least twice, fielding a team of a minimum of 10 players. This year’s line-up included the following firms: • Baker Tilly • CohnReznick LLP • Deloitte • EisnerAmper LLP • Friedman LLP • KPMG LLP • Mazars USA LLP • Meisel, Tuteur & Lewis, P. C. • PricewaterhouseCoopers LLP • SAX LLP • SobelCo • Untracht Early LLC • Wiss & Company, LLP “At our firm, working as a team and having strong communication are critical. The reasons we are so successful in this kickball tournament year after year is the strong communication, work ethic and teamwork we display as well as the bonds that have been built throughout all levels of our firm.
It is a great opportunity for our people to strengthen our relationships with each other and help out a great charity at the same time,” said Daniel Valenti, CPA, senior auditor at CohnReznick LLP. Proceeds from the tournament support The Valerie Fund, a Maplewood-based charity that supports children with cancer and blood disorders. The Fund was formed in 1977 by Ed and Sue Goldstein, whose daughter passed away at age 9. Today, The Valerie Fund Centers are located within seven pediatric hospitals in New Jersey, New York and Philadelphia. “Who doesn’t love kickball? The Valerie Fund is such a great cause too! Some friendly competition with
peers in the profession while getting a workout — it’s a win-win-win!” said Nicole DeRosa, CPA, MAcc, tax manager at WithumSmith+Brown and co-chair of the NJCPA Emerging Leaders Council, which developed the idea for the tournament. The Council guides the Emerging Leaders Interest Group in developing programs and events geared towards those members with less than 10 years of work experience. “We encourage all members to participate in the tournament. It’s a fun way to connect with your colleagues and coworkers outside of the typical office environment,” added Theresa Hinton, director of member engagement at the NJCPA.
NJCPA Food Drive Kicks Off The fall is a great time to be a volunteer and give back to the community. The NJCPA Emerging Leaders Council is looking for lots of volunteers and donations to kickstart its annual Food Drive, which culminates in a collection of nonperishable items and canned goods donated to the Community FoodBank of New Jersey in Hillside. Items will be collected at the NJCPA office in Roseland, various member firm locations and other sites throughout
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the state from Sept. 16 to Nov. 15. Check njcpa.org/fooddrive for the nearest location. Last year’s drive collected more than 3,700 pounds of food. Volunteers are needed at the FoodBank on Nov. 12 to assist with the collection, sort and work in their children’s division. To sign up, please visit njcpa.org/fooddrive. Typically, 25 members are needed on site at NJCPA’s Night at the FoodBank to assist staff.
SEPTEMBER/OCTOBER 2019 | NEW JERSEY CPA
“I’m always amazed at the generosity of our members and what they can accomplish working as a team. The Food Drive is a wonderful reminder that there is a lot of hunger to stamp out right here in New Jersey,” said Ralph Albert Thomas, CPA (DC), CGMA, CEO and executive director at NJCPA. “This is a great way to participate in that worthy cause.” Last year, the FoodBank provided over 47 million meals through its network of more than 1,000 community partners.
CLASSIFIEDS
MERGERS/ACQUISITIONS
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. Monmouth County tax and wealth advisory firm seeking partnership with CPA practice(s): looking for an additional source of recurring revenue to compliment your tax practice? Looking to enter the wealth advisory business without the costs and complexities? Do you have a succession plan for incapacity or retirement? Contact Gregg at gshaw@hstaxwealth.com, 732-268-8813; www.hstaxwealth.com. Retirement minded? Want this to be your last tax season? Long established Morris County firm seeks to acquire firms ranging from $100K-$350K for expansion. Interested? Contact Managing Partner at morriscountycpa@gmail.com. Retirement-minded Middlesex County CPA, looking for CPA to take over my firm. Gross $450K. Must have strong background. Small existing client base a plus. Reply in confidence at njcpa.org/classifieds. Parsippany, NJ based practice seeking retirement-minded sole practitioner with established Morris County practice to associate or transition with. Contact matt@mascpallc.com. Gloucester County CPA firm for sale. Firm generates annual revenue of 550K. Client mix consists of write-up and tax work for small to medium-sized businesses and individuals. High profit margins, experienced staff. Atlantic County firm for sale. Firm generates annual revenue of
440K. Client mix consists of small business accounting, income tax and live payroll processing. Both sellers are retirement-minded. For more information contact Todd Steinberg at todd@thrivefinancialgrp.com or 609-870-8116.
REAL ESTATE
The Marchese Group, a father-son CPA firm in Northern NJ is looking for retirement-minded practitioners for buy-out of entire practice or compilation, review or audit clients. Please contact brian@tmgcpa.net. New Jersey practices for sale: gross revenue shown: Hunterdon Co. CPA $650K; Union Co. tax clients (virtual office) $100K; Perth/Amboy tax $180K. For more information, call 800-397-0249 or visit www.aps.net. 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 peerreviewed firm, while continuing to provide your clients with exceptional service. To confidentially discuss this opportunity please email us at carolynn@tfgllc.com. Union County Accounting and Tax practice seeks growth through retirement-minded practitioners looking to transition toward retirement. Ideal annual billing should range from $250K to $750K, but would welcome all discussions. Please reply in strict confidence to gary@mlcpanj.com. To learn more about us, please visit www.mlcpanj.com.
Gorgeous new CPA office in professional building in Fair Lawn, NJ. Classy and pretty furnishings and decorum. Office share includes: beautifully decorated reception area and kitchen. Limited share of stunning conference room as well. Two beautiful, private, windowed, bright and furnished rooms available for rent. Rent includes furniture, internet and utilities. Near all highways. Handicapped accessible building. Ample free parking. $1000 per month. Contact Sandy at 201-947-8081 or sandy@ourcpas.com.
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PROFESSIONAL SERVICES
Quality Review for CPA firms — over 30 years of experience in risk-based audit planning. Contact James M. Sausmer, CPA at james.sausmer@gmail.com, 732-261-7710, www.jimsausmercpa.com.
To see additional classified listings or to place an ad, visit njcpa.org/classifieds.
NEW JERSEY CPA | SEPTEMBER/OCTOBER 2019
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MEMBER STORY
Bob now helps operates Windsor Bergen Academy in Ridgewood, Windsor Preparatory High School in Paramus, Shepard School in Kinnelon and Shepard Preparatory High School in Morristown. “We are here if parents are looking for a more specialized setting for their students. We complement public school districts and charter schools,” he explains. Bob and his wife find their day-to-day functions especially enjoyable due to the kinds of students with which they interact, from elementary to high school. “Our staff does an amazing job. We have dedicated educational professionals. Working in specialized education is very rewarding,” he says.
All in the Family BY KATHLEEN HOFFELDER, NJCPA CONTENT EDITOR
When Robert (Bob) Scorzo, CPA, was parking cars at a country club at the age of 18, he was told by a member that when he gets out of college, he needs to have a profession, such as CPA, doctor, lawyer or teacher. That advice not only stuck with him, he passed it on to his sons — and, surprisingly, they all listened. More than 35 years later, Bob and his wife Annmarie are proud parents of three CPAs — Matthew, Stephen and Nicholas — and one Ramapo College student, Robert, who wants to become one. After toying with other majors like criminal justice and psychology, the three older sons became CPAs and ended up working at one of the big four firms. The youngest, Robert, was a 2019 recipient of the NJCPA Scholarship Award for college students. So how do you raise such a CPA-focused family? It starts early. To Bob’s parents, who were Italian immigrants, obtaining a profession seemed like sound advice. Bob’s twin
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brother, Michael, also took that to heart and earned his CPA, eventually becoming a partner at a CPA firm and leaving to invest in a glass business in Michigan. Today, he’s the president and CEO of several glass franchises in the Midwest. Not to be outdone by his brother, Bob had his own entrepreneurial drive. “When I was 26, I started my own firm. From there, I eventually brought my small group of clients into another CPA firm,” explains Bob. One of the firm’s clients, the Windsor group of New Jersey-approved special education schools, offered him a job as the school Business Administrator. Years later, in 2003, he and his wife partnered with another couple to own and operate four of the schools after the original founder stepped down. As Bob explains, “when I left the CPA firm for the schools, I thought it was an opportunity to delve into private industry. Working at the schools was a niche position that interested me.”
SEPTEMBER/OCTOBER 2019 | NEW JERSEY CPA
PUTTING ACCOUNTING INTO PRACTICE Where does accounting fit into this mix? Just about everywhere, according to Bob. “Operating the schools and having an accounting background is very helpful, especially being self-employed.” To him, having an accounting degree has opened doors. “Over the past 30 to 40 years, school districts are hiring CPAs more than ever. There is a need for CPAs in just about any field so accounting professionals have many options,” he adds. “And if my sons choose to operate their own business like my brother and I do now, the accounting background and CPA license help to steer through all types of financial turbulence.” ALWAYS THE COACH Even though his sons are grown, Bob can’t resist the urge to coach town sports and still participates on Kinnelon’s recreational board. “For others, it’s golf; for me, coaching is my hobby,” he explains. When his sons were younger, he coached lots of sports. “As a dad, it was important to have time for my sons. Once the boys got older, I still stayed involved in the community, working with little kids.” He also feels the need to “coach” young professionals about the accounting profession when it comes up in conversation. He reminds students that “if you apply yourself and work hard, you will have more opportunities when you graduate.”
Looking for new talent or opportunities? The NJCPA Job Bank is a top source of New Jersey’s accounting jobs.
USE THE JOB BANK TO BE MATCHED WITH THE RIGHT OPPORTUNITIES.
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Learn more at njcpa.org/jobs. NEW JERSEY CPA | SEPTEMBER/OCTOBER 2019
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CAMICO Representative Irene M. Walton Area VP, Affinity Manager T: 215.351.4765 E: irene_walton@ajg.com
Accountants Professional Liability Insurance may be underwritten by CAMICO Mutual Insurance Company or through CAMICO Insurance Services by one or more insurance company subsidiaries of W. R. Berkley Corporation. Not all products and services are available in every jurisdiction, and the precise coverage afforded by any insurer is subject to the actual terms and conditions of the policies as issued. © CAMICO Services, Inc., dba CAMICO Insurance Services. All Rights Reserved.