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4 Are Major Federal Tax Changes on the Horizon?
A wave of tax modifications, regarding exemptions, standard deductions, or state and local tax deduction limits, could be on the way as many tax provisions under the 2017 Tax Cuts and Jobs Act are slated to expire Dec. 31, 2025.
6
M&A Sell-Side Transactions: Legal, Financial and Operational Considerations
Understanding the legal issues and considerations as well as workforce decisions when initiating merger and acquisition (M&A) sell-side transactions is crucial to ensure a smooth process and reduce unnecessary risks.
8
Accounting & Auditing Update for Not-For-Profit Entities
Accounting professionals should be aware of changes in Uniform Guidance, accounting for and disclosure of crypto assets, standards for measurement of credit losses and risks of material misstatements.
to Florida: Tax Considerations and Pitfalls Foreign Investment into Domestic Private Equity Funds: A Basic Individual Perspective
Technology is Transforming the Accounting Profession
Accounting Educators Strategize Tactics
BY KATHLEEN HOFFELDER, NJCPA SENIOR CONTENT EDITOR
The New Jersey Society of CPAs (NJCPA) hosted three accounting educators in a panel discussion in October to discuss what is currently working and what still needs to be done to entice more students into accounting programs and become CPAs. Don Meyer, chief marketing officer at the NJCPA and moderator of the panel, said students as well as graduates need support in getting to the CPA license step.
ENGAGEMENT HELPS
Barry R. Palatnik, CPA, Ed.D, MBA, associate professor and accounting program chair at Stockton University, noted that explaining what a CPA can do the old-fashioned, in-person way can make a difference with students. “Last summer, we had a lot of open houses and instantdecision days at Stockton. I made it my purpose to go to pretty much every single one and I told a story. I focused on the accounting students, but I also looked at the undecided majors and I sat at those tables and told them what accounting can do for you,” he said. The number of students enrolled at Stockton increased last fall along with accounting majors. “We’ve been up pretty significantly from the other programs.”
Steven J. Budryk, CPA, MS, manager at Traphagen CPAs & Wealth Advisors and adjunct professor at Ramapo College of New Jersey, also saw rising enrollment overall and in accounting majors. “They just brought in their largest amount of freshman at Ramapo College in history, and the accounting class is also going up. We saw a slight decline in recent years, but it has started to pick up,” he said. “It’s super exciting just to see that trend back upwards.”
A similar theme played out at Rutgers Business School-New Brunswick, where Sarah L. O’Rourke, CPA, is an assistant professor of professional practice in the Department of Accounting & Information Systems. She explained that enrollments in accounting majors were up. “It’s coming back, slowly but surely,” she added.
DRIVE TO CPA
Getting students to stay in those classes and advance further in their journey are often tougher steps to mount. Panelists noted that students today need some level of hand holding while taking the higher-level accounting courses and encouragement to sit for the CPA Exam and go into the accounting profession.
O’Rourke initiated a “Road to CPA” program at Rutgers during the COVID pandemic that works to make the drive to obtaining a CPA license easier. To her, it is designed to be inclusive and open to all accounting majors. “Some students really know exactly what they want to do and understand the CPA path…and other students are lost and need a lot more
guidance. The idea is to meet students where they are at,” she said. Road to CPA includes career guidance, mentoring, a semester-long review course for the Financial Accounting and Reporting (FAR) section of the Exam and even an artificial intelligence (AI) and accounting speaker series.
MORE THAN STUDYING
Beyond the classroom is perhaps just as important as what courses are being taught for today’s accounting students. According to Budryk, the coveted internship during college is still crucial for landing jobs once students graduate. “Any experience is great experience,” he explained. Ramapo has co-op programs, where the student works one-on-one with a professor, whether accounting or in another business program, and the student is working in the profession for credit, he noted. “Coupling academia and the industry is a great balance.”
Teachers also need to think beyond just the classroom material. Accounting students need to be taught with “care and compassion,” added Palatnik. To him, there needs to be a focus on learning along with rigor, instead of the typical “weed-out” classes of the past. “The content is the same, but it’s the way you deliver the material, which is critical.”
Watch the full discussion at youtu.be/ DuTq9PIdXrw.
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ARE MAJOR FEDERAL TAX CHANGES ON THE HORIZON?
By NEIL BECOURTNEY, CPA SMOLIN LUPIN & CO., LLC
The Tax Cuts and Jobs Act (TCJA) was legislated in late 2017 and primarily became effective as of Jan. 1, 2018. Numerous tax changes impacting individuals, some business provisions and the estate tax threshold under TCJA were enacted with a set expiration of Dec. 31, 2025, for budgetary reasons. That deadline is rapidly approaching.
Congress will have choices to consider, such as the following:
y It can take no action, resulting in many tax provisions reverting in 2026 to what they were in 2017.
y It can extend the expiring TCJA provisions for additional years by approving legislation making the TCJA provisions permanent or blow everything up via new legislation.
The Congressional Budget Office and the Joint Committee on Taxation have estimated that extensions of all provisions that are scheduled to either expire or become less generous would cost an estimated $5 trillion between FY2025 and FY2034.
SUMMARY OF EXPIRING TCJA PROVISIONS
y The top personal income tax rate would increase from 37% to 39.6%.
The TCJA did not increase the reduced tax rates on long-term capital gains or qualified dividends.
y Standard deductions would revert to $6,350 for single filers and $12,700 for joint filers. Consider that for 2024, the basic standard deduction for joint filers (neither spouse age 65 or blind) will be $29,200. This resulted in a substantial drop in the number of taxpayers itemizing their deductions.
y The maximum child tax credit would drop from $2,000 to $1,000 along with a corresponding drop in the income phaseout thresholds.
y Personal exemptions of $4,050 for each filer and dependent would resurface.
y The $10,000 state and local tax (SALT) deduction limit would vanish. There have been continuous efforts by Congressional representatives of high-tax states to either increase or repeal the SALT limit over the past seven years without success.
y The cap on home mortgage interest deductions would increase from $750,000 of acquisition indebtedness to $1,000,000 along with interest paid on home equity indebtedness of up to $100,000 again being deductible.
y The “Pease” limitation (3%) on itemized deductions would resume.
y Cash contributions to public charities, currently limited to 60% of AGI, would be limited to 50% of AGI.
y Miscellaneous itemized deductions above 2% of AGI would again be deductible as would moving expenses, the latter deduction “above the line.”
y All casualty losses (currently only those incurred as a result of a federally declared disaster) would be eligible for deduction.
y The alternative minimum tax (AMT) on individuals that has rarely reared its ugly head since 2018 would reflect decreases in the AMT exemption and phaseout thresholds, which combined
with the elimination of the SALT deduction limit (often a leading cause of incurring AMT), would make many taxpayers again subject to AMT.
y The Sec. 199A (QBI) deduction would disappear. This deduction effectively reduced the top tax rate on eligible Schedule C, rental and pass-through entity income to 29.6% (37% less 20%) compared with the 21% C corporation tax rate (permanent change that is not expiring).
y Bonus depreciation for assets placed in service during calendar year 2026 currently slated at 20% would be eliminated.
y The estate and gift tax exemption for 2024 has increased to $13,610,000 via annual indexing for inflation. It would revert to $5 million (indexed for inflation, estimated to be about $7 million) for decedents dying on or after Jan. 1, 2026. Final regulations adopted in November 2019 (known as the “ anti-clawback” rule) generally prevent an estate from being taxed on gifts made during 2018 through 2025 on a higher basic exemption amount (BEA) that would exceed the exemption amount for 2026 and future years.
The following individual tax changes included in the TCJA were either made permanent or expire after 2026:
y For divorces occurring after Dec. 31, 2018, alimony is no longer deductible to the payer and no longer taxable to the payee (note that New Jersey did not adopt the alimony changes). This permanent change was a revenue raiser as the alimony payer is typically in a higher tax bracket than the alimony recipient.
y The Sec. 461 loss limitation (conveniently calculated on Form 461) of $250,000 for single filers and $500,000 for joint filers (indexed for inflation) was extended to 2028 by the Inflation Reduction Act.
y At the end of 2026, the Qualified Opportunity Zones that were created under the TCJA to allow the deferral of capital gains taxes on certain new investments in economically distressed areas are set to expire.
STATE AND LOCAL TAX IMPACT
Some states piggyback the Internal Revenue Code, thus expiring federal provisions would impact state and local income taxes. New York enacted legislation decoupling from the various itemized deduction
changes contained in the TCJA, therefore continuing to allow an unlimited deduction for real estate taxes and allowing miscellaneous itemized deductions above 2% of AGI. Taxpayers with very high incomes can take that with a grain of salt as all their itemized deductions are phased out but for 50% of charitable contributions.
Various reports have indicated an increase in recent years of migration by residents of high-tax northeast states, such as New Jersey and New York, to Florida (no personal income tax), spurred by both the SALT deduction limit and the pandemic where many taxpayers realized they could perform their jobs remotely and no longer needed to reside in close proximity to their employer’s location. If the SALT limitation ceases to apply in 2026, it is conceivable that some high-income taxpayers might move back north with the knowledge that they will be obtaining a federal tax benefit for their state income and real estate taxes, assuming they escape the reach of the AMT. Another consideration is meeting the two out of five preceding year test for excluding up to $500,000 of gain on the sale of a principal residence.
Neil Becourtney, CPA, is a tax director in the Red Bank office of Smolin Lupin & Co., LLC. He is a member of the NJCPA and can be reached at nbecourtney@smolin.com
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FEDERAL TAX KNOWLEDGE HUB njcpa.org/hub/federaltax
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Dec. 20, Live Webinar MONTHLY TAX UPDATE WITH ED ZOLLARS
Jan. 9, Live Webinar, or Jan. 23, Webinar Replay ANNUAL TAX SEMINAR njcpa.org/events
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JOIN THE FEDERAL TAXATION INTEREST GROUP njcpa.org/groups
M&A SELL-SIDE TRANSACTIONS: LEGAL, FINANCIAL AND OPERATIONAL CONSIDERATIONS
By LEN GARZA, ESQ. GARZA BUSINESS & ESTATE LAW, LLC
Mergers and acquisitions (M&A) are inherently complex, involving multiple layers of legal, financial and operational considerations. Understanding the legal issues and considerations for the target company is crucial to ensuring a smooth transaction and mitigating potential risks.
STRUCTURING THE TRANSACTION: ASSET VERSUS STOCK SALES
One of the most critical early-stage decisions is whether to structure the deal as an asset sale or a stock sale. This decision has significant tax implications and affects the parties’ liabilities and post-transaction control.
y Asset sales: In an asset sale, the buyer acquires specific assets and liabilities of the target company. This structure is desirable to a buyer if the seller owns assets that the buyer does not want, or if the buyer believes the seller has significant unknown liabilities that the buyer does not want to assume. It’s important to keep in mind that even when the buyer does not explicitly assume certain liabilities from the seller, there may be certain liabilities the buyer cannot avoid such as when the buyer is merely a continuation of the seller or the transaction is an attempt to defraud the creditors of the seller.
y Stock sales: In a stock sale, the buyer purchases the seller’s ownership stake, acquiring the entire company, including its assets and liabilities. Sellers typically prefer stock sales for the simpler tax treatment and the ability to pass on existing liabilities to the buyer. On the flip side, buyers may be wary of the potential for unforeseen liabilities and
may require robust representations and warranties or indemnification provisions to protect against these risks.
Understanding the tax and liability implications of these transaction structures is critical to ensuring that companies make informed decisions that align with their business goals.
DUE DILIGENCE: UNCOVERING HIDDEN LIABILITIES
For sell-side clients, due diligence involves preparing for a comprehensive review of their financial, operational and legal documentation. From a legal perspective, due diligence focuses on identifying potential liabilities that could impact the transaction’s value or feasibility. Key areas of concern include the following:
y Pending or potential litigation: Legal disputes, even those that are seemingly minor, can be a red flag for buyers as they may lead to unforeseen costs or reputational damage.
y Regulatory compliance: Noncompliance with industry-specific regulations or general business laws can halt a deal in its tracks. A thorough review of licenses, permits and regulatory filings is essential.
y Real estate liabilities: If the target company owns or operates real estate,
legal ownership, mortgages, leases and other related documents must be carefully examined. The key purposes of this review are to determine what rights the seller has in the subject property and to confirm the buyer’s intended uses of the property will be permitted.
Other areas of due diligence that could be critical depending on the type of companies and the industry include intellectual property, labor and employment, environmental and cybersecurity due diligence. Companies should be proactive in addressing these issues before they become stumbling blocks during negotiations.
REPRESENTATIONS, WARRANTIES AND INDEMNITIES
The seller will be expected to provide representations and warranties about the state of the business. These statements serve as assurances to the buyer regarding the company’s financial health, compliance with laws, ownership of assets and more.
y Representations and warranties: These are detailed statements of fact that sellers provide to the buyer regarding the business’s operations, assets, liabilities and legal standing. Common representations include assertions about the accuracy of financial statements, the absence of undisclosed liabilities and compliance with applicable laws.
y Indemnities: Indemnification provisions protect the buyer in case any of the seller’s representations or warranties turn out to be inaccurate or misleading. For example, if a seller misrepresents the company’s tax liabilities and the buyer is later subject to a tax audit, the indemnification clause would require the seller to compensate the buyer for any resulting losses.
The scope and duration of these indemnities are often acutely negotiated parts of the deal, as sellers aim to limit their post-closing liability while buyers seek maximum protection.
EMPLOYEE AND BENEFITS CONSIDERATIONS
Another critical legal consideration during a sell-side M&A transaction involves the company’s workforce. Whether the buyer intends to retain employees, integrate them into a larger organization or implement redundancies, employee-related issues need to be addressed early in the transaction.
y Employment agreements: For key employees, retention agreements can help ensure continuity during the transition. These agreements typically include financial incentives to retain critical personnel through the closing of the deal or beyond.
y Benefits liabilities: Employee benefit plans, including pensions, health insurance and stock option plans, may create liabilities that need to be addressed in the transaction documents. Understanding the legal and tax ramifications of these plans is vital to ensuring that the buyer is not inadvertently taking on significant financial obligations.
POST-CLOSING OBLIGATIONS
The sale does not end at the closing table. Post-closing obligations, such as earn-outs, working capital adjustments and ongoing indemnification obligations, can have lasting financial and legal implications for sellers.
y Earn-outs: Earn-outs allow sellers to receive additional compensation based on the company’s future performance.
While attractive for bridging valuation gaps, earn-outs often lead to disputes post-closing as the parties may have different interpretations of performance metrics.
y Working capital adjustments: Working capital adjustments ensure that the company’s working capital at closing is consistent with a pre-agreed target. Post-closing adjustments may result in the seller owing money to the buyer if the target is not met or vice versa.
Understanding these ongoing obligations and their potential financial impact is crucial for sell-side companies.
COLLABORATION IS KEY
M&A sell-side transactions require careful planning and a deep understanding of the legal issues involved. CPAs and tax professionals are in a unique position to help companies navigate these complexities, particularly when it comes to managing tax liabilities. By working closely with legal advisors, CPAs can help ensure that the seller achieves the best possible outcome in the sale of the company.
Len Garza, Esq., is principal and managing attorney of Garza Business & Estate Law LLC. He can be reached at Len@LGarzaLaw.com
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Dec. 20 (and additional dates), Live Webinar
ACCOUNTING & AUDITING UPDATE FOR NOT-FOR-PROFIT ENTITIES
By ALEXANDER K. BUCHHOLZ, CPA, MBA, CGMA PKF O’CONNOR DAVIES
For the past few years, especially in the aftermath of the pandemic, there have not been many new accounting or auditing pronouncements issued. However, there are a few that anyone who works with or for a not-for-profit (NFP) entity should know about.
UNIFORM GUIDANCE
For those NFPs that expend more than $750,000 of federal funds and are subject to the various requirements of the Uniform Guidance, there are some significant changes that are in effect for awards issued on or after Oct. 1, 2024. Several of these changes are as follows:
y The equipment threshold increases from $5,000 to $10,000.
y The modified total direct costs subawards threshold increases from $25,000 to $50,000.
y The supplies threshold increases from $5,000 to $10,000.
y The requirements for establishment and maintenance of internal controls of federal awards for both the recipient and subrecipient are enhanced. As part of the internal control maintenance, NFPs must ensure that personally identifiable information is being safeguarded.
y The de minis indirect cost rate will be raised from the current 10% provision to 15%.
y The single audit and major program threshold increases from $750,000 to $1 million for those federal awards expended that equal or exceed $1 million but are less than or equal to $34 million.
CRYPTO ASSETS
Accounting Standards Update No. 202308, Accounting for and Disclosure of Crypto Assets, becomes effective for fiscal years beginning after Dec. 31, 2024, and requires a cumulative effect adjustment to net assets as of the beginning of the period of adoption. To date, NFPs have been treating crypto assets as indefinite lived intangible assets, whereby no gains are being recognized until realized. Crypto assets are defined by the standard as follows:
y Meet the definition of an intangible asset
y Do not provide the asset holder with enforceable rights to or claims, underlying goods, services or other assets
y Are created or reside on a distributed ledger based on blockchain or similar technology
y Are secured through cryptography
y Are fungible
y Are not created or issued by the reporting entity or its related parties
The standard now replaces the historical cost/impairment model and requires that crypto assets be reported separately from other intangible assets (e.g., goodwill) and measured at fair value. Any related changes in the carrying value should be recognized in net income separately from
other intangible assets. The notes to the financial statements should include significant crypto asset holdings; restrictions (if any); a reconciliation of period activity; and the method of determining the cost basis.
CREDIT LOSSES
Accounting Standards Update No. 201613, Measurement of Credit Losses on Financial Instruments, became effective for fiscal years beginning after Dec. 15, 2022. While this standard was originally geared for financial institutions, it does apply to NFPs that are in the business of making loans. The scope of this standard encompasses loans receivable, financing receivables, trade receivables and contract assets recognized under Accounting Standards Update No. 2020-05, Revenue from Contracts with Customers.
The assessment of grants and contributions receivable are scoped out of this standard. Impairment of receivables moves away from an incurred loss model to an expected loss model. The term allowance for doubtful accounts in connection with credit losses is now replaced with allowance for credit losses, which will be a valuation account deducted from the gross receivable amount. NFPs will now need to take into consideration not only historical experience with payors but forecasts of future expectations.
LEASES
Accounting Standards Update 2023-01, Leases (Topic 842): Common Control Arrangements, issues a practical expedient that allows the evaluation of written terms and conditions of a common-control arrangement as well as clarifies the accounting for leasehold improvements in commoncontrol arrangements. The effective date for this standard is for fiscal years beginning after Dec. 15, 2023. The first part of this standard provides an optional practical expedient under which NFPs — those that are not conduit bond obligors — can use written terms and conditions of an arrangement between entities under common control to assess whether a lease does indeed exist as well as the subsequent accounting/classification. The second part
of this standard requires that any leasehold improvements under common control leases be amortized over the useful life of these leasehold improvements as long as the lessee controls the use of the leased asset. If there is no longer control, then the leasehold improvements should be accounted for as a transfer between entities via an equity adjustment.
AUDITOR’S RISK ASSESSMENT
Statement on Auditing Standards No. 145, Understanding the Entity and its Environment and Assessing the Risks of Material Misstatement, became effective for fiscal years beginning on or after Dec. 15, 2023. It is important to note that this standard did not impact the core concepts of audit risk assessment. Instead, this now provides auditors with additional guidance to identify and assess risks of material misstatement in the financial statements. The standard also updates the concept of significant risk (and the introduction of the spectrum of inherent risk) and requires separate assessments of inherent risk and control risk for each relevant assertion. The definition of a significant risk is when the inherent risk is at the upper end of the spectrum. It is this assessment of inherent risk that determines if the risk of material misstatement will qualify as significant.
One other aspect of the standard is that when auditors do not test controls and assess control risk at maximum, the risk of material misstatement equals the inherent risk for that assertion. For example, if assessing the valuation assertion for cash
at a value of “low” and there is no reliance on internal controls and control risk is assessed at “high,” the final risk of material misstatement would now be “low.”
Alexander K. Buchholz, CPA, MBA, CGMA, is an audit partner in Not-for-Profit Services at PKF O’Connor Davies. He is a member of the NJCPA and can be reached at abuchholz@pkfod.com.
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Dec. 5, Live Webinar NONPROFIT CONFERENCE
DEC. 16, LIVE WEBINAR THE MOST CRITICAL CHALLENGES IN NOT-FOR-PROFIT ACCOUNTING TODAY
DEC. 16, LIVE WEBINAR BEST PRACTICES IN NOT-FORPROFIT ACCOUNTING AND REPORTING njcpa.org/events
Understanding the AICPA’s New Ethics Interpretations
BY JACLYN VENO, CPA, GALASSO LEARNING SOLUTIONS
The AICPA’s Professional Ethics Executive Committee (PEEC) recently issued two new ethics interpretations: the “Executive or Employee Recruiting” interpretation (ET sec. 1.295.135) and the “Tax Services” interpretation (ET sec. 1.295.160). These updates reflect global standards and address independence threats when firms provide recruiting or tax services to attest clients. These interpretations, especially crucial for smaller accounting firms, aim to mitigate risks when non-assurance services (NAS) are offered to audit clients. This article summarizes the key elements and implications of these new interpretations.
“EXECUTIVE OR EMPLOYEE RECRUITING” INTERPRETATION
On June 10, 2024, PEEC issued the proposed “Executive or Employee Recruiting” interpretation to address threats to independence when members perform recruiting services for attest clients. This update, the first in more than 20 years, aligns with recent revisions by the International Ethics Standards Board for Accountants (IESBA) on recruiting services.
Key independence threats arise when members assist in hiring for key positions — especially those in senior management who influence financial reporting. Such roles pose undue influence and familiarity risks, given their proximity to engagement teams. To reduce these risks, PEEC has proposed new prohibitions: members are restricted from advising on specific employment terms, remuneration or related benefits of a particular candidate; searching for candidates; conducting reference checks; and recommending a single candidate for key roles at an attest client. These safeguards ensure that management’s hiring responsibilities remain separate from the auditor’s role.
PEEC also proposed stricter guidance from IESBA on candidate solicitation. The previous AICPA guidance allowed members to “solicit and screen candidates”
based on client-approved criteria, but IESBA’s code prohibits “seeking out candidates” for key roles. PEEC adopted this phrasing for clarity and added a provision permitting members to search for candidates for non-key positions based on clientapproved criteria.
An important distinction in the revised interpretation is that members may recommend multiple qualified candidates but are prohibited from recommending only one candidate for a key position. Members can advise clients on a candidate’s competence but must not directly influence hiring decisions or the final terms of employment for key positions. PEEC also addressed concerns over reference checks, proposing that auditors be prohibited from performing reference checks for key positions due to familiarity and undue influence threats, but allowing them to use professional judgment when conducting background checks for non-key roles. The proposed effective date for this interpretation is Jan. 1, 2026, with early adoption permitted.
“TAX SERVICES” INTERPRETATION
PEEC’s revisions to the “Tax Services” interpretation reflect changes in IESBA’s tax standards, specifically addressing independence threats when firms provide tax advisory and planning services to attest clients. One major concern is the advocacy threat, where a CPA might be perceived as advocating for a client’s tax position, potentially impairing independence.
Previously, the interpretation only covered tax return preparation and representation services, without guidance on tax advisory or planning services. The new proposed interpretation broadens the scope, providing factors to help auditors evaluate self-review and advocacy threats. These factors include the complexity of the tax regime, the degree of judgment involved, the materiality of the advice on the financial statements and the client’s tax expertise. The goal is to ensure auditors
avoid advocating for tax positions that could compromise their independence.
Additionally, the threshold PEEC proposes to use to convey when independence is not impaired when providing these services meets the “more likely than not” threshold, consistent with U.S. standards such as Public Company Accounting Oversight Board (PCAOB) Rule 3522 and Financial Accounting Standards Board (FASB) ASC 740. Auditors must ensure that any tax service they provide has at least a 50% likelihood of success based on technical merits. If this threshold cannot be met, independence is impaired.
The proposed revisions emphasize that providing general tax advice involving little subjectivity or where the tax treatment has been approved by authorities does not impair independence. However, if the tax treatment is uncertain or involves aggressive strategies, independence may be compromised unless the auditor is confident the treatment will likely be upheld. The new interpretation, when finalized, will take effect one year after its publication in the Journal of Accountancy, with early adoption encouraged.
Firms, particularly smaller ones, should familiarize themselves with these revisions to ensure compliance and avoid impairing independence when offering these nonassurance services to attest clients. These changes will take effect over the next few years, providing ample time for firms to adapt their practices accordingly.
Jacyln Veno, CPA, oversees the development of Level Training programs for Galasso Learning Solutions. She can be reached at jacyln@ galassolearningsolutions.com.
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Dec. 13 (and additional dates), Live Webinar
INDEPENDENCE AND CONFLICTS OF INTEREST njcpa.org/events
A Multifaceted Approach to Address the Accountant Shortage
BY JEFFREY KASZERMAN, NJCPA VICE PRESIDENT OF GOVERNMENT RELATIONS
By now, everyone knows about the challenge the CPA profession is facing with a shortage of students going into accounting and sitting for the CPA Exam.
Here is an overview of the CPA pipeline challenges:
y There are about 13% fewer CPAs nationwide than there were in 2019.
y New Jersey has seen a similar drop, from about 23,500 CPAs in 2019 to 20,500 in 2024.
y 75% of accounting professionals are within 15 years of retirement, and with accounting enrollments down 20% in the past 10 years, there are not enough young professionals to take their place.
A lack of accountants is already affecting businesses large and small. Not only do they provide accounting services, many CPAs also serve as financial advisors to clients, especially small businesses. Local governments are also facing a severe shortage of “in house” accountants and external auditors. We have heard this from many of the local officials we met at the League of Municipalities Convention. It has reached a crisis point.
NJCPA EFFORTS
One of the most critical steps that the NJCPA has taken to address the shortage is the creation of a Pipeline Advocacy Work Group. The group is composed primarily of accounting educators from New Jersey high schools and colleges, as well as some business school administrators and others who have ties to the education community.
This group is exploring advocacy avenues to lobby state government to increase the availability of accounting education and funding in high schools and higher education, especially for minorities. Their efforts include the following:
y Pursuing means to get accounting designated as a science, technology, engineering and math (STEM) subject, which would open up increased funding and promotion withing the educational system
y Identifying existing state grant programs that accounting students can take advantage of
y Passing legislation that would buttress accounting education
y Making lawmakers aware of the dire consequences of an accountant shortage
y Having New Jersey incorporate accounting as a major prong in its Workforce Development programs
The work group is partnering with the New Jersey Business and Industry Association (NJBIA) to achieve its goals. Workforce development has been a priority for the business community, and NJBIA lobbyists are working with the group to create a long-term advocacy plan to meet the pipeline challenge head on.
Some of the advocacy initiatives the group will undertake include the following:
y Determine whether accounting is being taught in the state’s high school and middle school statutorily required financial literacy requirements. If not, change the statute and or the implementation of the requirement.
y Strengthen relationships with the New Jersey Education Association and its chapters and special interest sections.
y Engage teachers, counselors and school administrators on the accounting shortage through articles in education publications.
y Determine if New Jersey has STEM designations that entitle certain subjects to increased funding. Work to get accounting included.
y Examine how to use the Career Technical Education (CTE) programs to increase accounting education in high schools.
y Connect with relevant STEM associations such as the New Jersey Business/Technology Education Association and the New Jersey STEM Pathways Network.
y Support federal legislation to allow federal STEM grant funding to be used for K-12 accounting education.
y Amend New Jersey’s STEM Loan Redemption Program to include accounting.
y Create a public relations advocacy campaign to heighten awareness about the harm that the pipeline problem is causing to businesses, individuals and government.
NATIONAL EFFORTS
On a national level, the American Institute of CPAs (AICPA) and the National Association of State Boards of Accountancy (NASBA) have released a draft licensure proposal for a “competency based” alternative to the 150-hour requirement. It would require two years of experience, the first of which requires a “CPA Evaluator” to confirm that the candidate has met certain competency standards. They also issued proposed amendments to the Uniform Accountancy Act (UAA) that would provide for the competency recommendations and a new procedure to determine substantial equivalency and mobility for interstate practice.
Comments on the proposals are due Dec. 6 and Dec. 30, respectively. Learn more at njcpa.org/pipeline
As the accounting profession looks to fill their talent pipeline, offering a flexible schedule can be an effective part of recruitment, employee engagement and retention. A flexible schedule is intended to provide employees with more control over their work schedule so it can better fit their lifestyle. However, it doesn’t mean there is no structure or that they don’t have inperson attendance expectations.
TYPES OF FLEXIBLE SCHEDULES
y Working from home: Many workers find that working outside of a standard office environment allows them to focus better without the interruptions of an open office. Working from home may be an ideal fit in these scenarios. Some positions may be designed as 100% work-from-home opportunities, while others function best with hybrid scheduling. Employers should prioritize company culture and connection to help employees who work from home feel part of the team.
y Part-time employment: Many workers choose part-time employment to care for children or fulfill other responsibilities. Flexible work opportunities can provide even more support in these cases.
y Compressed workweeks: A compressed workweek means employees complete the same number of hours in fewer days. Working a four-day workweek, where work is completed in four 10-hour days, is becoming more common for professional roles.
y Flex time or flexible hours: With flex time, employees have flexibility in the timing of their work as long as they complete their expected number of hours. If an employee is asked to stay late or work an extra shift, for example, they can take an equivalent number of hours off later in the week.
y Asynchronous work: Asynchronous work allows employees to choose their own schedules, including start and end times, breaks and which days they work. This is often a good solution for companies with employees in different geographic locations who need to schedule meetings across time zones.
ADVANTAGES OF FLEXIBLE SCHEDULES
y For employees: Employees value flexible work schedules because they offer more freedom to design a schedule around their unique needs. Benefits include better work-life balance, enhanced productivity, reduced stress and greater job satisfaction. When employees have the flexibility to take time off or change their schedules, the likelihood of job-related stress decreases and job satisfaction increases. One study found that working at home increased job satisfaction by 65%, and working an alternative schedule boosted the likelihood of job satisfaction by 62%.
y For employers: Offering a flexible schedule allows employers to expand their talent search to include skilled workers in other locations and candidates who need to work from home for personal or family reasons. Employers could also see improved outcomes, including higher retention rates, enhanced productivity and reduced overhead costs.
DISADVANTAGES OF FLEXIBLE SCHEDULES
y For employees: Not all employees enjoy working from home. They may feel increased pressure to be productive or feel like they are always on the clock. Blurring of work-life boundaries can quickly lead to employee burnout. Schedule flexibility can also create challenges for teams. When you aren’t
sure when a team member will be in the office or on the clock, it can be harder to schedule meetings and get feedback.
y For employers: Some employees work better away from the office, but others don’t. When employees are struggling, they can’t do their best work and may not be as productive without the accountability of an office environment. Managers must be careful that employees working flexible schedules don’t become “out of sight, out of mind.” Maintaining communication, providing feedback and offering recognition when schedules vary require extra effort.
TRENDS IN FLEXIBLE SCHEDULING
Flexible work opportunities have dramatically increased since 2020, and they are here to stay. Younger generations of workers already have increased expectations for flexible work opportunities, and the benefits for employee health and wellbeing are undeniable.
With strategic vision and practical policies and guidelines, employers can use flexible work to attract new talent, increase engagement and retain their best employees.
Julie Caplan is the marketing content program manager at Paychex. She can be reached at jcaplan@paychex.com.
Paychex is an NJCPA member benefit providerLearn more at paychex.com/ accounting-professionals
Access the full article on flexible work at go.paychex.com/nj-flexwork
Beyond the Numbers: Incorporating Financial Wellness into Your Practice and Personal Life
BY STEPHANIE RYSTROM, Ph.D. STUDENT, TEXAS TECH UNIVERSITY, AND JEFFREY CHRISTAKOS, CPA, PFS, CFP, CHRISTAKOS FINANCIAL
CPAs frequently encounter clients whose financial habits run deeper than what can be captured on a balance sheet. True financial wellness isn’t just about crunching numbers — it’s about fostering a holistic approach that builds confidence and security in managing money. By integrating strategies that enhance financial understanding along with emotional well-being, CPAs and accountants can guide clients toward creating lasting habits that lead to long-term financial stability and success. Integrating financial wellness into your practice (and into your personal finances as well) allows you to not just help clients achieve financial success, but also foster overall well-being — making sure they are financially secure, less stressed and aligned with their life goals. Maybe they don’t even really know what their goals are and assisting them in defining these life landmarks can be instrumental in overall happiness and satisfaction.
Financial wellness is not a numbers game, nor is it determined by net worth, how much money can be saved on taxes or even a client’s access to discretionary funds. It means having literacy to understand one’s financial situation, actively managing money in a way that aligns with a person’s values and having the tools to deal with downturns and financial challenges effectively. This means helping clients move from a purely transactional relationship with money to a more thoughtful and holitics approach.
IMPLEMENTING FINANCIAL WELLNESS WITH CLIENTS
One of the first steps is focusing on behavior and mindset, not just the numbers. People regularly know what they “should” do, but emotions like fear, anxiety and greed stop them from doing it. CPAs and accountants can play a crucial role in helping clients overcome behavioral biases which, in turn, lead to poor financial decisions.
For example, many clients fall victim to social comparison and thereby lifestyle inflation — as their income increases, so do their expenses. Educating them about common behavioral traps and guiding them towards more mindful approaches to money can be extremely beneficial.
IMPLEMENTING FINANCIAL WELLNESS IN YOUR PERSONAL LIFE
CPAs are not magically immune to financial stress or imbalance, and practicing what you preach is a vital component. When you incorporate financial wellness into your personal life, you are better able to empathize with clients and model the behavior and mindset that you are encouraging them to adopt. Steps you can take to do this include the following:
y Set clear personal financial goals and ask yourself what financial success looks like for you. Having a clear picture of what you’re trying to achieve and work towards can help guide your decisions.
y Create a spending plan and be as intentional with your personal finances as you are with your clients. This could include identifying your values as well as long-term goals and being mindful of lifestyle inflation to maintain a balance between saving for the future and enjoying life now.
y Manage financial stress. Identify your stressors and implement strategies to help alleviate those financial worries.
y Find a balance between work and personal life. This includes setting boundaries, being available for self-care and ensuring that you are as invested in your personal life as you are in your career.
TOOLS
TO GAUGE FINANCIAL WELLNESS
In addition to the commonly used objective metrics, such as savings rate, debt-to-income ratio, emergency fund and overall net worth, there are important subjective factors to consider, including financial stress, financial goals and confidence. Tools to measure and improve financial wellness include the following:
y Gallup Financial Well-Being Index: gallup.com/topic/well-being-index.aspx
y Rutgers Cooperative Extension Financial Fitness Quiz: njaes.rutgers.edu/ money/assessment-tools/financialfitness-quiz.pdf
y The PERMA model (positive psychology): positivepsychology.com/ perma-model/
y FINRA Investor Education Foundation: finrafoundation.org/knowledge-wegain-share/nfcs
y Employer workplace financial wellness programs that provide access to personalized financial planning, education and wellness assessments.
By integrating subjective and objective metrics with a focus on well-being, these tools offer a more nuanced understanding of financial wellness. Financial planning, and specifically the evolving areas of financial wellness and well-being, require that CPAs and accountants remain diligent at growing as professionals in the field.
Stephanie Rystrom is a Ph.D. student at Texas Tech University’s School of Financial Planning. She can be reached at strystro@ttu.edu. Jeffrey Christakos, CPA, PFS, CFP, is a partner at Christakos Financial. He is a member of the NJCPA and can be reached at jeff@christakos.cpa
Taxation of Annuities: A Guide for Accountants
BY CARLOS DIAS, JR., DIAS WEALTH, LLC
Understanding the tax implications of annuities is key for advising clients on their retirement planning. Annuities are not only often misunderstood by clients but also by the financial advisors and insurance agents that market these products, including their tax benefits.
One of the principal benefits of an annuity is the ability to grow on a taxdeferred basis. Still, it’s also subject to tax, and how they are taxed depends on how the annuity was funded.
QUALIFIED VERSUS NON-QUALIFIED ANNUITIES
Annuities can be purchased either with qualified or non-qualified dollars. Qualified annuities are funded with pre-tax dollars, typically through an employer-sponsored retirement plan such as an IRA, 401(k) or pension plan. Contributions are taxdeferred, meaning taxes are paid when withdrawals are made.
Non-qualified annuities are funded with after-tax dollars and only the interest portion of the withdrawal is taxable. However, depending on whether it's an immediate or deferred annuity, it’s subject to either the exclusion ratio or last-in-first-out (LIFO).
EXCLUSION RATIO VERSUS LIFO
The exclusion ratio is used to determine what percentage of non-qualified annuity income is taxable and involves calculating the principal (non-taxable) and earnings component (taxable). After the principal has been depleted, any remaining income payments are considered interest. If the person lives longer than their actuarial life expectancy, any payments received after that age are fully taxable since the exclusion ratio is calculated to spread principal withdrawals over their lifetime.
Example: A $100,000 immediate annuity is purchased by a 65-year-old with 15 years of life expectancy (or 180 months) and the payment is $800 per month. About $555.56 of each payment is not taxable and the exclusion ratio is 69.4%.
LIFO tax rules dictate that earnings are always taxed first. Prior to the Tax Equity and Fiscal Responsibility Act of 1982, deferred annuities were subject to firstin-first-out (FIFO). Once the amount withdrawn exceeds the amount of earnings, subsequent withdrawal amounts are considered a tax-free return on the principal. After the original deposit has been reimbursed, all subsequent payments are completely taxable.
Example: A $100,000 fixed annuity grows to $150,000, meaning $50,000 is interest. If withdrawals begin after age 59½, all withdrawn funds up to $50,000 are subject to ordinary income tax. Amounts above $50,000 would be considered a return of principal and not subject to taxes. However, any proceeding withdrawals are once again taxed at ordinary rates.
ANNUITY INHERITED “STRETCH”
If a client inherits an annuity, the tax rules vary contingent on which type was received. Inherited qualified annuities follow the SECURE Act, where the outcome depends on whether the recipient is an eligible or non-eligible designated beneficiary. If deemed eligible, the beneficiary can stretch payments over their life expectancy. If not eligible, the annuity would have to be withdrawn by the tenth year after the original account owner’s death. Withdrawals are subject to ordinary income tax, and it depends on whether the original annuity owner had begun taking required minimum distributions (RMDs) before passing away.
Inherited non-qualified annuities don’t benefit from a step-up in basis — meaning the taxes remain unchanged — but can be taken over a beneficiary’s lifetime. Beneficiaries who want to reduce their tax liability will use the stretch provision, which allows them to receive periodic payments of the annuity’s value over their life expectancy. As such, the remaining balance continues to grow tax-deferred which helps the beneficiary reduce taxation.
1035 ANNUITY EXCHANGES
Existing non-qualified annuities can be exchanged — meaning no tax is paid on earnings — when moved from one insurance company to another. This process, known as a 1035 annuity exchange, is allowed under Section 1035 of the Internal Revenue Code. In addition, Section 844 of the Pension Protection Act of 2006 gave new incentives to fund long-term care with annuities and life insurance.
Clients with no need for their existing annuities can effectively convert to a longterm care annuity, either partially or fully. Regardless of the reason, a 1035 annuity exchange offers a tax-free alternative to cashing in an unwanted annuity and using the proceeds to purchase a new one. This tax benefit can make a 1035 exchange a more attractive option for clients looking to optimize their annuity investments.
Example: A $100,000 fixed annuity grows to $150,000, meaning $50,000 is interest. A 1035 exchange transfers it to a long-term care annuity that provides benefits up to $450,000. If used for long-term care, the money used is completely tax-free.
Annuities are complex financial products that offer significant benefits, but the various tax implications require a deep understanding to navigate effectively. It’s crucial to provide clients with informed and competent guidance as part of an overall retirement planning strategy. By leveraging your expertise, you can help clients make well-informed decisions that optimize their financial outcomes.
Carlos Dias, Jr., is a multilingual wealth advisor, public speaker and founder of Dias Wealth, LLC. He can be reached at carlos@diaswealth.com
6 Ways to Unlock the Value of Advisory Services
BY SAM MANSOUR, CPA, MANSOUR ADVISORY GROUP
Many CPA firms have recognized the growing demand for advisory services, yet they often struggle with properly valuing and pricing these offerings. The transition from traditional compliance work to advisory roles presents a significant opportunity for firms, but only if they approach it with the right mindset and strategy. The following six steps will set you on the right path:
1. PROPERLY PRICE ADVISORY SERVICES
One of the most common challenges CPA firms face is undervaluing their advisory services. Accountants often fear that charging too much will alienate clients. However, it’s important to remember that clients are paying for your expertise, not just the time spent on a project. A good rule of thumb is to price your services at 10% to 15% of the financial benefit your advice will bring the client. For example, if your work helps a client realize $100,000 in benefits, a fee of $10,000 to $15,000 is reasonable.
In cases where your billable hours exceed that percentage, you can adjust your pricing accordingly. The key is to ensure that your fees reflect the value you’re providing, not just the hours logged.
2. TURN ADVISORY SERVICES INTO RECURRING REVENUE
Many CPAs see advisory work as one-time projects, but there’s often potential to turn these engagements into recurring revenue
streams. For example, if a client asks for a margin analysis, don’t position it as a single deliverable. Instead, explain the value of conducting regular margin reviews to stay proactive about pricing and profitability.
The more frequently you provide advisory services, the greater the long-term benefit to both your firm and the client. This shift from one-off projects to ongoing support not only stabilizes your firm’s revenue but also provides clients with continuous value, helping them avoid reactive financial decisions.
3. AVOID COMMON PITFALLS
One major pitfall CPA firms fall into is giving away too much for free. It’s easy to think that a small piece of advice isn’t worth charging for, but over time, this practice can diminish the perceived value of your services. Instead, always ensure that your advice is packaged as part of a service that reflects its true worth.
Another common mistake is underselling your expertise. What seems simple to you may be quite complex for your client. Even if the solution feels straightforward, don’t downplay the importance of your advice. Your clients rely on your knowledge to make informed decisions, and they are paying for the value that expertise provides.
4. STRUCTURE CLIENT AGREEMENTS AND FEES
To avoid confusion or dissatisfaction, it’s essential to clearly define the scope of your advisory services up front. Be specific about what’s included and outline any additional fees for services that fall outside of that scope. Many accountants are hesitant to charge for extra work as needs evolve, but clients will understand if you communicate transparently from the start.
It’s also helpful to set expectations around payment. Billing for advisory services at the start of the month, with payment due by mid-month, can prevent accounts receivable issues. This approach ensures that your firm’s cash flow remains healthy and reduces the time spent chasing payments.
5. PROVIDE VALUE WITH PRELIMINARY ASSESSMENTS
When transitioning clients into advisory services, offering a preliminary assessment can be an effective strategy. For clients you believe are worth your time, consider conducting a free or low-cost mini analysis of their financials. This allows you to identify their issues and demonstrate the potential value you can bring.
Once you have a solid understanding of their challenges and the financial upside your services could deliver, you can confidently present a proposal. This approach not only builds trust with the client but also gives you a clear baseline to price your services appropriately.
6. EXHIBIT CONFIDENCE
One of the biggest barriers to pricing advisory services appropriately is a lack of confidence. Many CPAs shy away from charging what they’re worth, fearing that clients will push back. However, when you provide clear, measurable value, clients will be willing to pay for it. Be assertive in communicating the financial upside you’re offering and reinforce the fact that your knowledge and expertise are what generate that value.
In summary, advisory services offer a significant opportunity for CPA firms to grow their practices and provide more value to clients. By pricing services based on the benefit to the client, turning onetime engagements into recurring work and confidently charging for your expertise, you can create a sustainable revenue stream and foster stronger client relationships.
Sam Mansour, CPA, is the principal of Mansour Advisory and can be reached at sam@ mansouradvisory.com
How to Succeed at Your First Job
BY SAMANTHA SCHMITT, CPA, WITHUM
“Nothing worthwhile comes easily. Work, continuous work and hard work is the only way to accomplish results that last.” — Hamilton Holt, American author
Starting a new job, let alone your first job in the accounting profession, can be overwhelming and nerve wracking — especially when all you’ve known is going to school, doing homework, studying and taking exams. This transition in life can be difficult for some individuals, however one can succeed in this new endeavor through the following skills and actions: take notes, ask questions, communicate, be organized, exhibit teamwork and be proactive. Let’s dive into each skill/action and how you can use them in your day-to-day job to be able to be successful in your career.
TAKE NOTES
When being assigned to a task, jot down notes on what you’re being asked to complete so that you can easily reference it. Additionally, as you’re being assigned a task, it’s important to understand what you’re doing and why you’re doing it. Try to look at the big picture so that you don’t miss something important.
ASK QUESTIONS
As you’re working on an assignment, compile your questions and set aside time to
discuss these questions with your manager. Asking questions shows initiative. However, first give yourself 10 to 15 minutes to figure out the issue independently. If you still can’t resolve the issue, present what you’ve uncovered to your manager (e.g., Is it a formula issue? Did the client provide the wrong support for the wrong selection?). Another important tip is to self review. Once you’ve completed a task, be sure to check the work you did. For example: Did you fill out every testing attribute within the workpaper? Are the formulas calculating properly? Does everything conceptually/ analytically make sense?
COMMUNICATE OFTEN AND BE ORGANIZED
Communication and organization are imperative to succeed in the accounting profession because you can be assigned to multiple engagements and work with several individuals at the same time. It’s important to find out due dates from your managers when a task is assigned so you can plan your schedule accordingly to complete the tasks in a timely manner. If there are conflicts, communicate with those you are working with so they can assist you in determining what should be prioritized.
Additionally, having a to-do list for each job, in OneNote or Excel for example, can help you stay organized and manage your time efficiently and effectively. Furthermore, compiling an organized list of outstanding items for a client will help ensure that all items are being addressed and resolved with the client.
EXHIBIT TEAMWORK AND BE PROACTIVE
Lastly, in any profession, it’s great to be a team player and be proactive. When you’ve completed a task, see what else can be done. Being proactive shows you are willing to learn and be a team player to see the project through to the end. It will also help you stand out compared to your peers because the more experience and exposure you get, the more knowledge you’ll gain.
Additionally, you want to be proactive in following up on items you worked on. Just because you worked on the testing, doesn’t mean that it ends there. Check to see if any review comments were left on the work you performed and address those comments. If you had open items with a client, did you follow up with them periodically?
Putting reminders on your calendar is another trick to help you to follow up with clients on outstanding items. You are responsible for seeing through the items you worked on, and you shouldn’t leave the team hanging. As the saying goes, “there is no I in team.”
All in all, it is your future and your career. Strive to be the best you can be and take in all the new experiences you are dealt. It’s ok to make mistakes as long as you learn and grow from them.
Samantha Schmitt, CPA, is an audit manager at Withum. She is a member of the NJCPA and can be reached at sschmitt@withum.com.
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12 Key Advancement Strategies Every Manager Must Master
BY EILEEN MONESSON, CPC, MBA, PRCOUNTS, AND KARINA MONESSON, GREAT PLACE TO WORK
Advancing within a firm isn’t just about technical expertise or seniority; it’s about aligning your values, actions and mindset with its broader vision. Becoming a leader involves consistently contributing to the firm’s growth while embodying the values that drive long-term success.
When it comes to what partners value most, they look for those who challenge the status quo, question practices and offer innovative alternatives while delivering impactful results. The following list outlines the qualities partners look for when evaluating leadership potential:
1. Show authenticity, presence and care. Leaders demonstrate authenticity and fully engage with both the firm and their teams. Being present means actively participating and showing genuine respect for colleagues and clients. Empathy and understanding are essential, as relationships are the foundation of success.
2. Balance confidence with coachability. Confidence is key, but so is humility. Great leaders balance self-assurance with a willingness to learn and adapt. Coachability — openness to seeing things differently and changing — separates good managers from truly impactful leaders.
3. Take calculated risks. Influential leaders know when to take thoughtful, fact-based risks. Risk-taking drives innovation, but it must align with the firm’s goals.
4. Align with firm values. Your values should align with the firm’s mission, vision and principles. Upholding these values in every decision builds trust. Living the firm’s brand means embodying these values internally and in every client interaction. This ensures that the firm’s identity is reflected in the work and relationships built, reinforcing
the trust and credibility that the brand stands for.
5. Adopt a holistic firm perspective. Leaders must see the bigger picture — beyond their department — gaining a comprehensive understanding of the firm’s brand, operations, goals and challenges. They need to recognize how their decisions impact long-term success.
6. Embrace responsibility and accountability. Effective leaders own their mistakes and learn from them. Accountability showcases integrity, and partners look for those who consistently take responsibility and strive for improvement.
7. Cultivate collaboration to strengthen team relationships. Effective leadership is built on strong professional relationships grounded in mutual respect and shared goals. Instead of competing, leaders cultivate collaborative and supportive environments that drive shared success. Partners value leaders who uplift others, knowing that the firm’s success depends on shared achievements, not individual competition.
8. Listen more, speak thoughtfully. Great leaders focus on listening, spending 80% of their time gathering insights from colleagues, clients and stakeholders. This approach helps them understand diverse perspectives, anticipate challenges and spot opportunities. Leadership isn’t about being the most vocal but about making thoughtful, wellinformed decisions that align with the firm’s goals and guide teams to success.
9. Commit to lifelong learning. Leaders are curious and committed to ongoing learning. Staying informed about the firm, industry and global trends allows leaders to remain adaptable and
prepared to guide teams in evolving environments.
10. Think and act strategically. Leadership requires more than task completion — it demands understanding the ‘why’ behind actions. Ask questions, test ideas and use data to make informed decisions.
11. Nurture stakeholder relationships. Effective leaders build strong relationships with clients, employees and partners, recognizing their importance to the firm’s success. Partners seek leaders who cultivate trust and drive growth. Dressing professionally, even on Zoom, reinforces this credibility, further enhancing these relationships.
12. Focus on impact through metrics. Ultimately, success is measurable. Whether it’s client satisfaction, revenue growth or efficiency, your contributions should have a clear impact. If your current role doesn’t involve specific metrics, create them. Partners focus on the results you achieve, not just the tasks you complete.
Advancing in a firm requires aligning with its values, strategic thinking and integrity. True leaders collaborate for collective success, supported by sponsors and coaches who champion their growth. Making an impact, staying curious and owning your actions will set you apart. Partners recognize those who embody these traits, positioning them for future leadership roles, influence and lasting success within the firm.
Eileen Monesson, CPC, MBA, is the CEO of PRCounts, a brand engagement company. She can be reached at emonesson@prcounts. com. Karina Monesson is a director at Great Place to Work US and can be reached at karina.monesson@greatplacetowork.com
4 Steps to Strengthen Cybersecurity with Your Team
BY CHRIS R. CICALESE, CPA, MSTFP, ALLOY SILVERSTEIN
In a post-pandemic world, remote work continues to be a mainstay in some form or another for employees. Unfortunately, with the increased remote workforce, there is also an increase in corporate vulnerabilities for perpetrators to exploit. These vulnerabilities often make a company’s complex security setup less effective. With a remote workforce, the added outof-office locations also increase the number of unmanaged devices that connect to the company network. Alternatively, having an in-office workforce or supplied devices for remote work allows the technology team to reduce complexity by having a more standardized device setup. If workers are supplying their own devices, it makes it more difficult, as each device may have different software and employees may not have the same philosophy about keeping their home network or devices secure.
1. USE A VIRTUAL DESKTOP
The best-case scenario when a device is not supplied by the employer would be to connect to a virtual desktop where the company can manage the data more easily and prevent it from being transferred to the employee’s device. With a virtual desktop, the technology team can disable various features such as printing or connecting storage devices to help manage client confidentiality. The desktop profile can also be customized so that upper-level management and entrusted employees have more abilities than the common employee. While making it more complex, it also provides management with more
flexibility to make their remote workforce more efficient.
2. ENABLE MULTI-FACTOR AUTHENTICATION
In both a company- and employee-provided device setup, multi-factor authentication should be utilized to prevent someone from easily accessing company information if they happen to get an employee’s password. An example is using an authenticator app or texting a code to be required after trying to access the system. Without the code, the user would not be able to access the files. To make it harder for passwords to get in the wrong hands, it would also be wise to require frequent password changes and complex alphanumeric passwords that also contain symbols or characters.
3. EDUCATE EMPLOYEES ON PHISHING SCAMS
While securing the devices and how the company’s data is accessed is a great start, all that hard work can quickly be undone with one click of a bad link. Phishing scams have become extremely popular with the rise of remote work. Perpetrators create fake emails with masked links that will bring employees to a fake page to capture their login information or install harmful files on the network. Without proper diligence, an employee can easily fall for one of these fake emails that can cripple a company’s network and reputation.
The best way to prevent employees from falling for these phishing scams is through education. An effective way is to utilize a phishing education campaign that has multiple layers to it. These layers often include an annual training, micro trainings and fake phishing emails. The annual training goes through the basics of what scams are out there and how employees can be prepared to identify bad emails. This can be part of new employee orientation initially and then included with annual training for current employees. Micro trainings can be conducted throughout the year to keep employees updated. Lastly, utilizing a fake
email campaign can help identify employees who would be an easy target and enable the company to focus on educating those employees to reduce the risk that they will click a bad link.
4. PERFORM PENETRATION TESTING
After getting a handle on devices and encouraging employees to pay attention to the details of emails, the next hurdle would be to test your network to see if it could get hacked. In most cases, you would utilize an independent third party from your technology services provider to ensure you get a fair look at how your systems are set up. By having a firm perform a penetration test, you can see what vulnerabilities exist in your network and what the technology team needs to focus on improving. The white-hat hackers could even use social engineering to try to get employees to provide information that otherwise would not be obtainable.
When considering the security of your client information and company network it is vital to be proactive. The potential liability from data being stolen or the network being down is not easily defined as every hack is different. It is best to get ahead of the potential loss and educate your team so that they are better prepared to identify and mitigate threats appropriately.
Christopher R. Cicalese, CPA, MSTFP, is an associate partner at Alloy Silverstein. He is a member of the NJCPA and can be reached at ccicalese@ alloysilverstein.com or on X at @AthleteCPA.
Moving to Florida: Tax Considerations and Pitfalls
BY GEOFFREY WEINSTEIN, ESQ., COLE SCHOTZ P.C. AND HENRY RINDER, CPA, ABV, CFF, CGMA, CFE, DABFA, SMOLIN LUPIN & CO. LLC
Sometimes, the decision to move from a high-income-tax state like New York and New Jersey to a state that does not impose an income tax, such as Florida, is precipitated by a taxpayer receiving substantial retirement income or the vesting and/or exercising of equity options caused by a change in control event. This article narrowly outlines critical state tax considerations and potential pitfalls of relocating to Florida.
UNDERSTANDING DOMICILE RULES
A prerequisite to analyzing the state tax treatment of income earned by a nonresident is determining whether a taxpayer has effectively changed their domicile. Domicile is where a person has his true, fixed, permanent home and principal establishment and to which they intend to return whenever they are absent.
A person may have several residences or places of abode, but they can only have one domicile. To show that a different state is a person’s new domicile, generally it is necessary to show the physical assumption of a new home in that location, an intention to establish a new domicile in that location and an intention to abandon the old domicile.
Changing domicile from New York or New Jersey to Florida involves demonstrating a clear intent to establish Florida as a permanent home. The proper strategy includes, among other things, the taxpayer buying or leasing a substantial residence, moving to the new residence with their family, registering to vote, changing driver’s licenses and, most importantly, abandoning ties to the previous state of residency.
DOMICILE VERSUS STATUTORY RESIDENCY
Even if a taxpayer effectively changes their domicile to Florida, they can still be considered a statutory resident of New York or New Jersey if they maintain a permanent place of abode in one of those states and,
with limited exceptions, spend more than 183 days in that state during the year. Not meeting the 183-day rule will automatically cause the taxpayer to be treated as a resident instead of a non-resident for income tax purposes.
The distinction between a resident and a non-resident is crucial. Residents are taxed on their worldwide income. Nonresidents pay tax only on income from the state. Proper documentation, such as credit card and telephone GPS records, utility bills and travel records, is essential; it’s a taxpayer’s burden of proof to show their whereabouts during a residency exam, and any unproven days by the taxpayer will be deemed a day spent in the former domicile.
STEPS TO ESTABLISH FLORIDA RESIDENCY
To successfully change residency from New Jersey or New York to Florida, taxpayers should take the following steps:
1. Sell or rent out the property located in the former domicile. Simply owning property in a taxpayer’s former domicile does not automatically make one a resident; however, maintaining significant ties to these states can.
Selling or renting out the property in an arms-length lease is perhaps the strongest evidence of a taxpayer’s intent to abandon their former domicile.
2. Establish strong ties in the new domicile. This includes buying or renting a Florida home that is larger or more valuable than the home in a taxpayer’s former domicile, moving their family there; registering to vote; obtaining a Florida driver’s license; joining local clubs and/or a house of worship; transferring medical care; and moving personal items and valuables to Florida.
3. Document time spent in each location. It’s vital to keep meticulous records of where time is spent to ensure that less than 183 days are spent in the former domicile. The taxpayer bears the burden of proof in residency audits, so being responsible and prepared with records is crucial.
4. Change mailing addresses and professional relationships. This includes the taxpayer notifying banks, brokers, accountants and other professional
relationships of their new Florida address and moving their professional relationships (e.g., doctors, investment advisers, insurance agents) to Florida.
POTENTIAL PITFALLS AND AUDIT RISKS
State tax authorities are vigilant in ensuring that taxpayers who do not meet the non-resident criteria pay their share of tax, interest and penalties. Residency audits initially focus on several key factors of domicile:
y Home: What is the comparative size, value and use of homes in the new versus former domicile?
y Business involvement: Is there continued involvement in a business located in the former domicile?
y Near-and-dear items: What is the location of personal items of significance, such as family heirlooms, collectibles and art?
y Family: Where do immediate family members, especially spouses and minor children, reside?
y Time: How much time is the taxpayer spending in the new versus former domicile?
If, during a state tax residency audit, a taxpayer either fails to show they effectively changed domicile or fails the 183-day statutory residency test, New York and New Jersey will generally tax all of their worldwide income, including pensions and deferred compensation such as performancebased equity compensation and change of control severance payments.
For a continuation of this article regarding the tax implications of a taxpayer being deemed a non-resident, visit njcpa.org/ newjerseycpa/winter2425.
Geoffrey Weinstein, Esq., is a member in the Tax, Trusts & Estates Department at Cole Schotz P.C. and can be reached at gweinstein@coleschotz.com Henry Rinder, CPA, ABV, CFF, CGMA, CFE, DABFA, is a member of the firm at Smolin Lupin & Co. LLC and a past president of the NJCPA. He can be reached at hrinder@smolin.com
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STATE TAX KNOWLEDGE HUB njcpa.org/hub/statetax
Foreign Investment into Domestic Private Equity Funds: A Basic Individual Perspective
BY LEN SPRISHEN, J.D., LL.M., MSPC CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS, P.C.
Foreign direct investment into the United States continues to increase year over year, despite the nation’s enormous cumulative deficit. Overseas investors still choose to purchase American investments for many reasons, including the U.S.’s highly developed, liquid and efficient financial markets, as well as its strong institutions and robust corporate governance. Those investors may also have close linkages with the U.S. generally or are resident in a politically or financially unstable country and wish to deploy their capital more safely. One popular route for U.S. investment among high-networth foreign citizens has increasingly become domestic private equity funds. Thus, CPAs with an international practice are now frequently confronted with an understandably perplexed foreign citizen client who forwards to them a package of dense documentation from their U.S. investment adviser, and the client then naturally wants to know how making this investment could affect their U.S. tax exposure.
INITIAL TAX IMPLICATIONS
Reviewing private placement memoranda, fund operating agreements and subscription documents (which is best done in conjunction with the client’s domestic counsel) is critical, but the tax issues in this context can be straightforward. Typically, U.S. private equity funds are organized as partnerships for tax purposes, which ensures that the foreign investors in the fund will not, assuming the fund is not engaged in a U.S. trade or business, be subject to federal
income tax on their distributive share of capital gains from the sale of fund investments (unless, importantly, a “U.S. real property interest” is sold, but that is another discussion, as is the varied approach taken by the states in these situations). The fund’s status as a partnership also often allows for the tax-free distribution of appreciated stock and securities to the investors, and a foreign investor’s sale of their interest in the fund itself should not, in most cases, be subject to federal income tax.
Difficulties can arise, however, when the fund is generating income that is “effectively connected” with the conduct of a U.S. trade or business. Foreign persons must pay federal income tax on any effectively connected income ("ECI"). If that person invests in a partnership that is engaged in a U.S. trade or business (an “ETB partnership;” what constitutes the conduct of a U.S. trade or business in this context is a factual question, but investment in active domestic operating companies, for example, will often qualify), they will be treated as engaged in a U.S. trade or business themselves. Under Section 875 of the Internal Revenue Code of 1986, as amended (the “Code”), a partnership’s U.S. trade or business activities will be attributed to its foreign partners regardless of how many intermediate partnerships separate the foreign partner from the ETB partnership. An ETB partnership must withhold tax on any ECI of the partnership allocable to its foreign partners, and those partners are required to file U.S. federal income tax returns.
USE OF A BLOCKER CORPORATION
A common method of avoiding the onerous consequences of ECI involves interposing a corporate blocker between the foreign individual investor and the ETB partnership. The blocker can be domestic or foreign, and the latter option is often particularly attractive because, assuming the blocker resides in a jurisdiction that has a tax treaty
with the U.S., the blocker’s ECI will not be taxable unless attributable to a U.S. permanent establishment. The blocker, being a discrete taxpayer, will report and pay tax on the operating profits of the ETB partnership that would otherwise be reportable by the foreign investors, thereby avoiding the individual attribution of those activities under Code Section 875, as well as obviating the need for foreign investors to file federal income tax returns.
Blocker structures can be quite variable as they can be organized above or below the fund, or they may not even be offered by the fund, which might instead permit individual investors to invest in the fund through their own blocker in connection with investments in ETB partnerships. When analyzing the attendant U.S. tax consequences of investing in ETB partnerships through a blocker, it is especially important for CPAs to consider the initial funding of the blocker (debt or equity), any associated foreign currency issues, the nature of the distributions made by the blocker and whether the foreign investor will exit the investment by selling the blocker’s shares. Therefore, great care should be taken to evaluate all fund investment documents and timely make any tax-favorable elections for foreign individual investors with the fund manager. In conjunction with this, CPAs should also review whether a tax treaty can benefit the investor at an individual level by reducing or eliminating withholding tax on certain types of income generated by investing in the fund.
Len Sprishen, J.D., LL.M., is the director of Global Tax Advisory at MSPC Certified Public Accountants and Advisors, P.C., a Moore Global firm. He can be reached at lsprishen@mspc.cpa
How Technology is Transforming the Accounting Profession
BY THOMAS KLEINHANS, CPA, CENTRI BUSINESS CONSULTING
As breakthrough digital products, artificial intelligence (AI) and automation tools continue to revolutionize industries across the world, there is no exemption for the accounting profession. Accountants have experienced a shift in the way they perform their duties and the expectation of output. The average allocation a corporate accounting team spends on data entry has drastically changed in the last 15 years for organizations that have trimmed costs while improving the efficiency of their accounting team. It’s pivotal for successful organizations to continue to adopt new technologies and adapt to these changes to give decision makers accurate and up-todate information.
AUTOMATION TOOLS
How many tasks in your day-to-day responsibilities require you to complete one routine process across several software products? If the answer is the entire day, there is probably a solution to automate much of your routine. Do you generate reports, modify the reports in Excel and send the finalized report to the same individuals on a daily/weekly/monthly basis? Let’s break down these steps and discover how automation can assist along the way:
y Generating reports: Most software applications have the capability to set up scheduled reports to be sent to certain users on a pre-determined frequency. This avoids potential human error when selecting criterion on reports and reduces the time spent pulling these reports.
y Modifying reports: Are you adding columns, formulas, filters and pivots to your report exports? If the modification process is repetitive and strenuous, there are solutions to truncate your process. Power Query, Alteryx, SQL or even improvements to the formula writing within Excel can help your team
develop a more automated process. Again, this drastically helps reduce errors due to manual formula writing and adds efficiency to the process.
y Sending finalized reports: Sending finalized reports usually does not take a significant amount of time in the process, but setting up scheduled emails can help reduce the time needed, especially if final reports are being sent to several individuals or several groups of intended users.
Within the accounting function, there are many software applications available for month-end reconciliation (e.g., Blackline, FloQast, Cadency), expense tracking (e.g., SAP Concur, Bill.com, Expensify) and other functions related to your business (e.g., payroll, project management, client relationship management) that assist in the automation of routine tasks. Companies can now complete monthly closing processes related to these functions in a fraction of the time it once took.
ARTIFICIAL INTELLIGENCE
I would be remiss if I did not inform the audience that I used AI to assist with brainstorming while writing this article. Generative AI programs like ChatGPT, CoPilot and Gemini are revolutionizing the industry by providing accountants with a tool capable of automating routine tasks. Asking a generative AI tool to draft an email to use as a starting point, complete a function within a Microsoft Office application, review and provide any suggestions for proposal decks, or summarize a transcript from a video call are some of the techniques I use to improve efficiency throughout the day.
Accounting software products are also starting to create AI add-ons to their respective packages. The most important skill accountants will need to acquire to work alongside AI in the future is prompting.
Phrasing communication with AI programs, training AI tools and evaluating different AI systems all fall within prompt engineering and are the pillars to gaining a competitive advantage using AI. We are still in the “gold rush” phase of AI technology, and it will be fascinating to see how public accounting firms, corporations and governments determine how this technology fits into their daily operations.
AI and automation tools are not the only types of technology transforming the accounting industry. Cloud computing is continuing to help firms scale and operate in a remote environment while data analytics tools are configuring and leveraging data points faster than ever before. Technology is not only transforming processes within the accounting profession, it is reshaping the role of accountants themselves. Accountants who spent endless hours at college remembering the FASB Codification, GAAP standards and IRS Tax Code now need to add prompt engineering, logic writing and inter-application integration to their toolbelts. As these technological advancements continue to evolve, they will undoubtedly redefine the landscape of the accounting profession.
Thomas Kleinhans, CPA, is a manager at Centri Business Consulting, LLC. He is a member of the NJCPA and can be reached at tkleinhans@ centriconsulting.com
JOIN THE EMERGING TECHNOLOGIES INTEREST GROUP njcpa.org/groups
LIFETIME LEADER
Celebrating the standout NJCPA member of exceptional merit for remarkable contributions to the accounting profession over the course of their career.
ROBERT A. FODERA, CPA
RETIRED PARTNER AT BAKER TILLY US, LP
For more than 40 years, Bob’s name has been synonymous with establishing audit methodologies and assurance practices at Baker Tilly US, LP and previously at Mazars (now Forvis Mazars) where he was also responsible for engagement management, including the direct supervision and training of professional staff. Bob was appointed to the New Jersey State Board of Accountancy by Governor Murphy, was a member of the NJCPA Board of Trustees, a treasurer of its Scholarship Fund, a past chair of its Audit Committee, a past president of its Middlesex/ Somerset Chapter, and was on the National Arthritis Foundation’s audit committee — making him truly a lifetime leader.
DIVERSITY, EQUITY & INCLUSION
Honoring the champions of diversity, equity and inclusion (DEI) who work passionately to make the accounting 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.
NICHOLAUS M. VACCARO, CPA MANAGER AT FORVIS MAZARS US
Nick embodies the very meaning of diversity, equity and inclusion. His dedication to equity initiatives is notable as he made a significant impact on Forvis Mazars’ Inclusion & Diversity Council. He championed inclusive practices, led firmwide panels and fostered a culture of belonging. He helped to strengthen the Council’s mission, driving positive change and acceptance firmwide. He regularly discusses his nontraditional career path.
EMERGING LEADER
Recognizing savvy superstars who have been working in the accounting profession 10 years or less and have noteworthy professional accomplishments; combined personal and professional achievements that merit special recognition; and/or actively participated in the advancement of the profession or NJCPA.
MICHAEL CARO, JR., CPA, CFE, PSA PARTNER AT BEDERSON LLP
Rising from intern to partner at Bederson, Michael is decidedly an emerging leader. Through his vast knowledge and hard work, he inspires staff, supervisors and managers to do their best work. Michael is a peer reviewer and team captain who also serves on Bederson’s Report Acceptance Body. He is a mentor to all staff in Bederson’s accounting and auditing department and participates on the NJCPA Peer Review Executive Committee.
MATHEW E. CENTENO, CPA, MBA
DIRECTOR AT SMOLIN, LUPIN & CO., LLC
Mathew delivers exceptional client service, shows expertise in audit and assurance and is committed to training staff. His contributions to quality control and his active roles in mentoring, participating on HR and continuing professional education (CPE) committees and documenting training manuals further demonstrate his leadership and commitment. Matthew is the vice president of the NJCPA Essex Chapter.
RICHARD M. DOUGLAS, CPA, CVA, MST
MANAGER AT PRICEWATERHOUSECOOPERS LLP
In addition to bringing a wealth of experience to his clients, both from an audit and private sector perspective, Rich is one of the most sought-after mentors to younger staff at PwC in the New York metro area. He continually works towards increasing technological advancement in audit processes and process improvements. Rich is an invaluable alum to both his high school and college communities.
ERIC MANNINO, CPA
AUDIT SENIOR AT WILKINGUTTENPLAN
Eric consistently goes above and beyond, taking on new responsibilities and enhancing his skillset. He proactively embraces and leverages technology and seeks feedback to increase his contributions to WilkinGuttenplan and improve job performance. Eric actively collaborates with all levels of staff from interns to partners, enhancing the office culture.
RORY T. GANNON, CPA, MST, CVA
MANAGING DIRECTOR, FORENSIC, LITIGATION AND VALUATION SERVICES AT SMOLIN, LUPIN & CO. LLC
Rory leads by example due to his innovative and client-focused approach. He is committed to mentoring and developing the next generation of accountants and has been promoted three times in five years at Smolin. Rory is also a qualified expert witness in New Jersey Superior Court.
JENNA M. McDONOUGH, CPA SENIOR ACCOUNTANT
WILKINGUTTENPLAN
AT
With a passion for learning and giving back, Jenna exudes true leadership. She actively develops her skills while mentoring new hires and interns. Jenna offers valuable guidance, shadowing opportunities, technical training and support to help them better understand the profession and succeed. She is also a director of the NJCPA Hudson Chapter, where she works to engage and connect accounting professionals.
DEREK L. LEONE, CPA
AUDIT SENIOR MANAGER AT DELOITTE
By setting a strong tone at the top and leading by example, Derek is the very definition of an emerging leader. At Deloitte, he is dedicated to inspiring and guiding each of his audit teams and continues to raise the bar higher. Derek is also very relatable to each team member and regularly participates in the firmsponsored Impact Day. He was awarded the Secretary of Defense Employer Support Freedom Award for members of the National Guard and Reserve.
MATTHEW J. MOJICA, CPA, PSA
FINANCIAL REPORTING SPECIALIST AT PRUDENTIAL
Matthew is in his third year on the NJCPA Emerging Leaders Council, where his passion for supporting the accounting profession runs deep. He created an orientation packet to help new Council members get started with their NJCPA journey and steadily works to give a voice to young accounting professionals.
MATTHEW P. STENGER, CPA
AUDIT MANAGER AT FORVIS MAZARS US
Matthew understands a deeper meaning of giving back. He participated in an accounting event for 70 students at Barringer High School in Newark along with the NJCPA, the Center for Audit Quality (CAQ) and EVERFI, where he discussed accounting and how it relates to students’ everyday lives. Amid the merger of Forvis Mazars in June 2024, Matthew was considered a “change champion” in bringing the two firms together.
LEXI WILSON, CPA, RMA, PSA
SENIOR MANAGER AT BOWMAN & COMPANY LLP
Dedicated to her craft and helping the next generation of accounting professionals, Lexi is a key member of the team that’s implementing a work-for-credit program between Bowman and Rowan University students. She is also an appointed member of the NJCPA Emerging Leaders Council, a student mentor and director of the Southwest Jersey Chapter.
EXCEPTIONAL EDUCATOR
Recognizing 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.
DANIELLE DiMEGLIO, CPA, MBA
INSTRUCTOR OF ACCOUNTING AND TAXATION; DIRECTOR OF GRADUATE ACCOUNTING PROGRAMS AT SETON HALL UNIVERSITY
Danielle is on a mission to improve the accounting pipeline. She directs Seton Hall’s CPA Pathways Apprenticeship Program, in partnership with Withum, and co-developed its Tax Lab courses, part of the Volunteer Income Tax Assistance (VITA) program. Danielle is also the co-advisor of Seton Hall’s Beta Alpha Psi student accounting organization.
TONY LIN, Ph.D.
ASSISTANT PROFESSOR AT ROWAN UNIVERSITY
With a background in mechanical engineering, Tony brings a new perspective to the classroom. A passionate scholar, Tony drives home the importance of obtaining a CPA license and the usefulness of AI/technology. He is a role model for integrating academia and the practical world. He is also the faculty liaison to the Rowan Accounting Advisory Board.
GEORGE H. MALGERI, CPA, MST, CFF
ADJUNCT PROFESSOR AT KEAN UNIVERSITY
Retiring after almost 50 years in accounting from his company, which recently merged into The Koenig Group LLC, George has been an absolute resource to all and brings a wealth of knowledge to the accounting profession. He is an adjunct accounting professor at Kean University, taught at Union College and is a tax presenter and Union County Chapter director at the NJCPA.
ANN MEDINETS, Ph.D., MBA
ASSOCIATE PROFESSOR OF PROFESSIONAL PRACTICE AT RUTGERS BUSINESS SCHOOL — NEW BRUNSWICK
A tireless promoter of the accounting profession for more than 20 years, Ann (an inactive CPA) is on several curriculum development committees, was asked to develop a course for the accounting department on AI and analytics and is continually reaching out to non-accounting groups to recruit students to study accounting.
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.
FRANK R. BOUTILLETTE, CPA, CGMA
PARTNER EMERITUS AT WITHUM
A well-known presenter and podcast guest, Frank has given to the NJCPA community for decades without question or pause. Throughout his many contributions and years of service, he has selflessly given his time, wit and humor. As a past NJCPA president, treasurer, trustee and chair of the Peer Review Executive Committee, Frank has made quite an impact.
E. MARTIN DAVIDOFF, CPA, ESQ.
PARTNER-IN-CHARGE, NATIONAL TAX CONTROVERSY AT PRAGER METIS CPAs, LLC
Marty truly embodies what it means to be a leader — in both his professional and personal lives. He is nothing short of an expert in IRS and state tax controversy resolution; however, his dedication to helping people not only includes his clients and other tax professionals, but it extends to the New Jersey community at large. He is founder of the Make-A-Smile Foundation, a nonprofit public charity that benefits children in need.
BRIGID D’SOUZA, CPA, MBA
FOUNDER AT BRIGID D’SOUZA CPA LLC
A role model by every stretch of the imagination, Brigid, who recently left a tenured Saint Peter’s University professor position and started her own practice, helped initiate the Saint Peter’s University/PwC work-for-credit program to assist students in becoming CPAs. She was instrumental in improving the accounting course curriculum at Saint Peter’s, a first-generation, Hispanic-serving institution (HSI) in New Jersey. She has written a fiscal literacy blog, Civic Parent, since 2013.
THEODORE A. CARNEVALE, CPA, CGMA
PARTNER AT GRASSI
With a career that spans the Big 4 to founding his own firm, Ted has showcased his leadership within the NJCPA, in Bergen County and throughout New Jersey. He’s known for mentoring and developing staff and having extensive NJCPA involvement, including being a member of the Bergen Chapter since the 1980s, becoming its president and serving as an NJCPA trustee.
KERRY M. DUDA WILSON, CPA
AUDIT MANAGER AT WILKINGUTTENPLAN
Kerry is active in multiple areas of the NJCPA and encourages others to step up. She is a director of the Bergen Chapter where she is an integral part of organizing the chapter’s CPE events. She is vice chair of the Society’s Strategic Planning Committee and leads the AICPA Auditing Standards Work Group. She also received the NJCPA Ovation Award in the Woman to Watch category in 2019 and the Emerging Leader category in 2023.
TIMOTHY F. GEARTY, CPA
PARTNER AT GEARTY & McINTYRE
Known as the “Dean of the CPA Review,” Tim is an amazing leader who has helped thousands of CPA candidates pass the CPA Exam. He is the vice chair of the Dean’s Advisory Board for Fairleigh Dickinson University’s Silberman College of Business and has served as an NJCPA trustee. As an expert in business topics, he is often called upon as a keynote speaker at Fortune 500 companies.
VINCENT P. REILLY, CPA
MANAGER AT WITHUM
Vince is a man of many talents. For the past 20 years, he has been a volunteer emergency medical technician with the Mendham Township First Aid Squad and was elected to several officer positions, including both chief and president of the Board of Trustees, and chairs its Bylaws Committee. He is also part of Withum’s Whippany office volunteer medical emergency team and a Cub Scout Den Leader.
CAROL DONATIELLO IOCCA, CPA
RETIRED PRINCIPAL AT WILKINGUTTENPLAN
With over 40 years of experience, Carol’s commitment to sharing expertise and mentoring exemplifies her unwavering dedication to the accounting profession. She has served as NJCPA treasurer and trustee, a peer reviewer, quality control partner and has significantly enhanced industry standards. She is also the chair of the finance committee at St. Mary’s Hospital in Passaic.
VIJAY A. SAMMY, CPA
PRESIDENT AT VIJAY SAMMY, CPA LLC
Vijay believes in giving back in a variety of ways. In 2012, he and his wife founded Hope for Family, Inc., a nonprofit organization that promotes financial literacy and purposeful living targeted toward young people and those from the Caribbean and South America. For 15 years, he has participated in the NJCPA career awareness program with presentations in Jersey City, Teaneck and Randolph. He is the vice president of the Morris/Sussex Chapter.
JAY L. LEVINE, CPA
PARTNER AT PRAGER METIS CPAs, LLC
Jay is an exceptional technical accounting leader who handles all tasks without complaint and strives for unparalleled quality. As a past accounting and auditing partner at LFL Veritas in Teaneck for over 20 years combined with his Prager Metis partner role, Jay has truly set his mark on the accounting profession. He also supports significant causes, such as children’s genetic abnormalities and cancer research, and is very involved in his local temple.
DAVID A. SMITH, MSFS
STRATEGIC ADVISOR/LOBBYIST AT PRINCETON PUBLIC AFFAIRS GROUP, INC.
As a lobbyist for the NJCPA for the past 25 years, Dave has been at the forefront of major legislative initiatives that have assisted the accounting profession and improved transparency for New Jersey businesses and taxpayers. Efforts include the privity statute, Accountancy Act revision, plainEnglish Annual Comprehensive Financial Report (ACFR) and New Jersey’s Pass-through Business Alternative Income Tax (BAIT) law.
DR. SEAN STEIN
SMITH, CPA, CFE, CGMA, CMA, DBA
ASSISTANT PROFESSOR AT LEHMAN COLLEGE
Sean continues to be a tireless advocate for the accounting profession and steadfastly works to educate and inform others about the impact of new and emerging technologies. With honors including Accounting Today ’s Top 100 Most Influential people in accounting, NJBIZ’s Power 50 List, AICPA Outstanding Young CPAs and NJCPA Innovation Award, Sean makes a big impact.
DARREN W. M. THOMAS, J.D., CPA, EA
TAX DIRECTOR AT TRAPHAGEN CPAs & WEALTH ADVISORS
As a licensed attorney in New York and New Jersey as well as an IRS enrolled agent who is federally authorized as a tax practitioner, Darren has a lot to offer his clients and the accounting profession. He is the leader of the NJCPA Federal Taxation Interest Group and is a director with the Bergen Chapter.
INNOVATION
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.
KEVIN P. McELGUNN, CPA
PARTNER AT WITHUM
Being at the forefront of a digital transformation and positioning himself as a leader within the industry, Kevin immediately saw the potential in pivoting Withum to a virtual audit experience, incorporating new software and changing how the firm approached its audits. Working with Withum’s audit leadership and advisory team, CPA.com, various groups of audit teams and technical resources, he aligned all their interests.
SARAH M. SNELL, CPA, PSA, PAFM
PARTNER
AND CHIEF OPERATING OFFICER AT HOLMAN, FRENIA ALLISON, P.C.
Becoming HFA’s second-ever female partner and with a career that spans public accounting and transitions into operations management, Sarah is truly an innovator. She has been instrumental in driving her firm’s client accounting and advisory services service line and seeks to enhance employee engagement through its On-the-Spot awards.
PHILIP C. SOOKRAM, CPA, MAcc
ASSOCIATE
PROFESSOR OF ACCOUNTING AT SAINT PETER’S UNIVERSITY
In addition to his teaching accolades, Phil adapted an existing free, open-source introductory accounting textbook into eight learning modules with over 50 interactive “H5P” assignments, using a platform called Pressbooks, that is accessible to anyone to learn or relearn introductory accounting principles. He collaborated with Saint Peter’s O’Toole Library and was given a school grant.
WOMAN 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.
KAREN L. ALBANESE, CPA, CGMA
CONTROLLER AT KONRAD BEER DISTRIBUTOR, INC.
Recently named Chair Emeritus for Rowan College at Burlington County Foundation Board, Karen’s passion and commitment to volunteering shines through in everything that she does. She served in many capacities at Rowan’s Foundation Board including chair, vice chair I and II and trustee. Due to her dedication to Inspira’s Health Network, Karen was named vice chair after serving a year on its board.
ANNE M. D’AMICO, CPA, PFS
ASSOCIATE PARTNER AT ALLOY SILVERSTEIN
As a firm-wide mentor, Anne plays an important role in employee retention efforts. She not only leads through her professional accomplishments, but she works one-on-one with younger team members to participate in media projects that celebrate women in accounting. Anne was a South Jersey Biz Woman to Watch winner and is an NJCPA career awareness presenter.
LISA FERRER-TVEDT, CPA
SOFTWARE REVENUE ADVISOR AT ZEBRA TECHNOLOGIES
Lisa stands out as a trailblazing accountant. By harnessing the vast capability of Power BI, she was able to transform data presentation and accuracy in her niche, revenue accounting. Lisa’s contributions represent a forwardthinking approach that empowers her entire organization to achieve greater accuracy and insight. She is a member of her firm’s Women’s Inclusion Network and volunteers at Habitat for Humanity.
SHANNON MOSIER, CPA
MANAGER AT SMOLIN, LUPIN & CO., LLC
Beyond her dedication to Smolin, Shannon’s volunteerism at HABcore, Inc. — which provides housing solutions for homeless families — Eastern Monmouth County Chamber of Commerce (EMACC) and other organizations is commendable. She consistently gives her time, skills and resources, addressing local needs and inspiring others to contribute. Her commitment fosters a culture of giving and strengthens community bonds.
KELLY M. KILLEA, CPA
SENIOR MANAGER AT FORVIS MAZARS US
Kelly has a genuine desire to see colleagues succeed and to actively contribute to their growth. During her 10-year tenure at Forvis Mazars, she has become a mentor and leader within the firm, spreading her impact beyond her own achievements. Kelly is also the vice president of the NJCPA Monmouth/Ocean Chapter and co-chairs their Tax Committee.
AMY PERRONE, CPA, RMA, PSA
SENIOR MANAGER AT BOWMAN & CO. LLP
Amy promotes a positive work environment. She teaches several CPE classes on single audits, which is an integral part of training new staff. She also keeps current staff abreast of any changes in requirements and leads the charge on implementation of changes in accounting and auditing standards. She participates in various NJCPA activities to promote the accounting profession to high school and college students, including essay reviews for scholarships and mentoring.
ALYSSA P. LEACH, CPA
SENIOR MANAGER AT PKF O’CONNOR DAVIES, LLP
As a mentor to staff, a career advisor and a significant part of the firm’s mentorship program, Alyssa is definitely a woman to watch. She takes the time to sit with staff and is active in the firm’s Leaders of Tomorrow Program for summer internships and recruiting. Alyssa is also an active member of the firm’s Women’s Initiative Network. She previously was an NJCPA scholarship winner.
DANIELLE C. WEISS, CPA, MBA
SENIOR MANAGER AT SMOLIN, LUPIN & CO. LLC
As a full-time working mom who overcame neck surgery and continued her volunteering commitments, Danielle is truly a woman to watch. She is the vice president of the Ocean County Chapter of Business Women Networking, LLC (BW NICE), treasurer of Tinton Falls Cooperative preschool, an active volunteer with the NJCPA Monmouth/Ocean Chapter and was a NJCPA/News12 New Jersey tax hotline volunteer.
NJCPA Publishes 2023/24 Audit Report
BY GREG TONDI, CPA, CGMA, NJCPA DIRECTOR OF FINANCE AND ADMINISTRATION
The combined financial statements for the NJCPA and affiliates (NJCPA Education Foundation and NJCPA Scholarship Fund) for the year ended May 31, 2024, have been published at njcpa.org/about.
NEW JERSEY SOCIETY OF CPA s
For the Society, membership dues were 3.8% higher than fiscal 2023, ascribable to an increase in the dues rates, though the number of dues-paying members declined by the end of May 2024.
Peer review fees were slightly lower compared to fiscal 2023, due to ongoing firm mergers, acquisitions and practitioner retirements. Total expenses decreased slightly compared to fiscal 2023.
Overall, the Society experienced an increase in net assets of $395,000 which was driven mainly by investment income
and overall operations that were better than budget.
NJCPA EDUCATION FOUNDATION
The Foundation continued to operate in a “virtual-first” mode but still hosted its key in-person events such as the Convention and Atlantic City CPE Cluster. NJCPA chapters continued hosting in-person events but at a reduced level compared to pre-pandemic times. The Convention had the most attendees and sponsors since pre-pandemic times.
Educational program fee revenue increased by 31% compared to fiscal 2023, with a corresponding increase in the direct costs of education programs due to food, beverage, audio-visual and other site-related charges that are not found with virtual programs.
The Foundation ended the fiscal year with a positive change to net assets of
$412,000 driven by investment income and increased program fees relating to the third year of the triennial, which was also higher than budget.
NJCPA SCHOLARSHIP FUND
To address the shortfalls in scholarship contributions, the Education Foundation Executive Committee and the NJCPA Board of Trustees approved a funding formula that will be budgeted annually and revisited triennially going forward. The Fund still managed to provide $218,000 in scholarships during the fiscal year. The Fund’s investment portfolio also experienced a similar increase to the Society and the Foundation, with the overall results being a $328,000 positive change to net assets, which was also better than budget.
In Memoriam: John C. Kelly, CPA
The NJCPA mourns the loss of John C. Kelly, CPA, who passed away on Aug. 31 at the age of 82. John, 1990/91 president of the NJCPA, will be remembered for his commitment to maintaining the importance of high professional standards in the accounting profession and for his devotion to his family and local communities.
Throughout his time at the NJCPA, John actively promoted ethical conduct in accounting through his work as chair of the Accounting & Auditing Standards Committee, Finance Committee and Continuing Professional Education Committee. He also was a member of the Board of Trustees and participated in numerous other committees and task forces.
A resident of Singer Island, Florida, and formerly Convent Station, New Jersey, John was the managing partner for the New York Metro office of Arthur Andersen & Co. After Arthur Andersen, he worked as
the senior vice president of finance for American Home Products (which later changed its name to Wyeth and was bought by Pfizer). John sat on many boards, including Horizon Healthcare, CR Bard and The Medicines Company.
Always one to give back, John was a member of the Knights of Columbus, the Knights of Holy Sepulcher and the Knights of Malta as well as a CYO basketball coach at St. Thomas More Church in Convent Station. Similarly, he remained a loyal alum to his alma mater, Seton Hall University, where he obtained both his undergraduate and MBA degrees. John was a season ticket holder since the 1960s and a former chair of Seton Hall’s Board of Regents.
John was proud of his Irish heritage, exhibited by his involvement in The Friendly Sons of St. Patrick of Morris County. He also volunteered at the Newark Boys Choir, The Seeing Eye and the
Commission on Higher Education. He previously served in the U.S. Army.
He is survived by his wife, Linda (Poulson) Scarborough, and her children: Sean (Kelly) Scarborough, Todd (Jenny) Scarborough, and Christopher; his children, Mary Beth (Phillip) Winiarski and Janet (Peter) O’Neill; his brothers Michael and Lee and sisters Lorelei Mastandrea and Margaret (Kerr) Karosen; and his grandchildren, great-grandchildren, cousins, nieces and nephews.
He is predeceased by his first wife, Mary (Karosen) Kelly, his brother Eugene, sister Jacquelin Ginder, his cousins Joe O’Toole and Brian O’Toole and his parents.
NJCPA Scholarship Applications Open
Marking its 65th year of scholarship distribution, the New Jersey Society of CPAs (NJCPA) is now accepting applications for its accounting scholarships. Collegebound New Jersey high school seniors, as well as sophomore, junior and senior accounting students at New Jersey colleges or universities, and select students from under-resourced or historically underrepresented communities, are encouraged to apply at njcpa.org/scholarships.
SCHOLARSHIPS FOR HIGH SCHOOL SENIORS
New Jersey high school seniors who intend to major in accounting or obtain a concentration in accounting at a four- or two-year institution can apply for $1,500 awards.
SCHOLARSHIPS FOR COLLEGE SOPHOMORES, JUNIORS AND SENIORS
Juniors majoring in accounting who are entering their senior year at a New Jersey college/university and seniors who are enrolling in an accounting-related graduate program in New Jersey can apply for $6,500 awards.
College sophomores or second-year students at New Jersey community colleges who are continuing their education at a four-year college in the fall are encouraged to apply for $2,000 awards.
SCHOLARSHIPS FUNDED BY THE DELOITTE FOUNDATION
Through the generosity of the Deloitte Foundation, the NJCPA Scholarship Fund is awarding three types of one-year scholarships for select students from under-resourced or historically underrepresented communities:
y College-bound New Jersey high school seniors who intend to major in accounting or obtain a concentration in accounting at a four- or two-year institution. Awards are $1,500 each.
y College sophomores or second-year students who are enrolled in an accounting program or have a concentration in accounting at a New Jersey college. Awards are $2,000 each.
y College juniors majoring in accounting who are entering their senior year at a New Jersey college/university and seniors who are enrolling in an accounting-related graduate program in New Jersey. Awards are $6,500 each.
QUALIFICATIONS AND DEADLINES
Students applying for the high school scholarships must have a cumulative 3.2 grade point average or minimum 1260 SAT
OR 26 ACT score (if taken). The application deadline is Dec. 9, 2024.
Applicants for the college scholarships must apply by Jan. 7, 2025, have a 3.2 GPA by the end of the fall 2024 semester and be a New Jersey resident. Sophomore college applicants must have at least three accounting credits completed by the end of the fall 2024 semester and a total of six accounting credits by the end of the spring 2025 semester, while junior or senior college applicants must have at least 12 accounting credits by the end of the spring 2025 semester.
“We look forward to rewarding many deserving accounting students this year and encourage everyone to apply. We are consistently impressed by the achievements of these students and their commitment to entering the profession,” said Angela Garofalo, CPA, CFP®, president of the NJCPA Scholarship Fund and a partner at Citrin Cooperman.
Aiysha (AJ) Johnson, MA, IOM, CEO and executive director at the NJCPA, added, “The NJCPA strives to be a resource for CPAs and accountants through all levels of their career. We are encouraged by the next generation looking to set their mark on the profession and thankful for our member donations.”
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PROFESSIONAL SERVICES
Quality Review for CPA firms: Audit, Review, Compilation, Employee Benefit Plans, Yellow Book, Revenue Recognition, Leases. Contact James M. Sausmer, CPA at 732-261-7710 or james. sausmer@gmail.com.
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by a CPA and the early introduction to the workforce. I’m forever grateful for PCTI because it had tremendous impact on my life,” he explains.
Jose also made the practical decision to attend Rutgers University-Newark for college. The 30-minute commute, affordable tuition and established connections with large employers made Rutgers a responsible and reasonable choice, according to Jose. Additionally, graduating high school in 2010 during the Great Recession also influenced his decision to pursue accounting, given the low unemployment rate for accountants at the time.
All Paths Led to Banking for This CPA
BY KATHLEEN HOFFELDER, NJCPA SENIOR CONTENT EDITOR
With three banking jobs under his belt, most would say Jose M. Borbon, CPA, CRC, exudes the necessary quiet professionalism and confidence needed for a banking career. But that wasn’t always the case. When he arrived in the U.S. from the Dominican Republic at the age of 10 with his parents and older sister, Meliza, he faced many challenges.
The first was learning English. Jose participated in English as a Second Language (ESL) classes. “I didn’t get held back because I tested well in math,” he recalls. “Back then, there weren’t many Spanishspeaking students at Hawthorne Elementary School. In ESL, it was just me and one other immigrant, so I was fortunate to receive one-on-one instruction from the ESL teacher to begin my English lessons.”
Jose also had to adjust to American culture, his new neighborhood in Hawthorne and later Paterson. He navigated extended school hours, new teachers and new classmates after moving during the middle of fourth grade. With Jose’s mother being
a teacher in the Dominican Republic and then a bilingual elementary school teacher in the U.S., “education was always stressed and prioritized,” he says. “I am the first out of my immediate and extended family who has graduated college in the U.S.,” he adds.
SCHOOL INFLUENCE
When it came time for high school, Jose made the prudent decision to apply to Passaic County Technical Institute (PCTI), later renamed Passaic County TechnicalVocational Schools. He credits PCTI with sparking his interest in accounting. At PCTI, Linda Murphy, a retired CPA and full-time teacher, encouraged students to pursue an accounting degree and ultimately become CPAs. PCTI’s Academy of Finance (AOF) program offered accounting classes in both the tenth and eleventh grades, along with a required paid work-based job training experience in the twelfth grade. “The program provided an excellent foundation, thanks to the extensive time spent teaching accounting fundamentals
From consumer loan manager at Columbia Bank to SBA portfolio/servicing manager at Kearny Bank and now vice president and audit manager at Northfield Bank, Jose’s career in banking has been a focused journey. Crediting his success in commercial banking with earning his CPA, Jose says, “Being a CPA has allowed me to qualify for and obtain positions I wouldn’t have secured otherwise. The credential and the value it holds in the business world have opened many doors for me. Because I wanted to maintain my CPA license, it has led to a wealth of opportunities.” He adds, “Success comes in many forms. A CPA license gives you career mobility that many other professions don’t offer.”
GIVING BACK
Assisting the younger generation and the Hispanic and minority communities is important to Jose, who sees himself in many of the students he encounters on school visits. He is regularly involved in financial literacy programs at the middle school level and the NJCPA’s career awareness presentations to high school and colleges, and he participates in Rutger’s accounting advisory department meetings. Last May, he also took part in a career session at Barringer High School in Newark in conjunction with the NJCPA, the Center for Audit Quality (CAQ) and EVERFI. “I am motivated to do this because when I was in school, I never saw anyone who represented me. And, if you don’t see yourself in a position, you may think it’s not possible.”
Jose Borbon with his mother and niece (left) and in the early days in Dominican Republic (right).
Accounting for the Future
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