On Balance Magazine - Sept/Oct 2021 by WICPA

September | October 2021 | Vol. 17 No. 4 A publication of the Wisconsin Institute of CPAs | wicpa.org

Certified Unconventional Lauren Poppen, CPA | 6

Plus: Analyzing the CPA decline | 10 Ransomware preparedness | 14 Diversity, equity and inclusion | 22 Taxing cryptocurrency | 28

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A publication of the Wisconsin Institute of CPAs | wicpa.org On the cover: Irene’s skirt will be a trellis with a purple-leaved climbing vine that will blossom with pink flowers in the spring. Landscaper and friend Michael Richards proposed the idea after Poppen told him she wanted to put a mannequin in the yard. Credit for crafting the skirt goes to Milwaukee sculpture artist David Arnold.

September | October 2021 Vol. 17 No. 4

6 Features

Columns

6 Certified unconventional Lauren Poppen, CPA, once nicknamed “Fancy Pants” for her unique attire, now exercises her creativity by painting mannequins to put in her front yard. By Marcia Tillett-Zinzow

22 THE PROFESSION Diversity, equity & inclusion The Black CPA Centennial provides an opportunity to recognize the barriers faced and learn how organizations can help Black CPAs overcome them. By Anita Dennis

10 Making sense of sliding statistics It’s no secret that young CPAs are in short supply and that the numbers continue to dwindle. A recent survey provides valuable insight. From the Illinois CPA Society 14 Surviving the ransomware siege Ransomware attacks are on the increase. Can your organization survive one? Find out the basic cybersecurity hygiene that can help you prepare. By Jeffrey T. Lemmermann, CPA, CITP, CISA, CEH 18 The enhanced ERC The Consolidated Appropriations Act of 2021 made key changes to the employee retention credit (ERC), creating new savings opportunities for both businesses and employers. By Jim Brandenburg, CPA, MST

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28 TAXATION Cryptocurrency and the IRS The IRS has had its eye on virtual currencies for some time, and with increased popularity comes greater scrutiny. By Robert B. Teuber, JD 32 HUMAN RESOURCES Mental health As staff begin returning to the office, employers need to address a lengthy list of issues to ensure a safe and welcoming work environment. By Carver Smith, CPA 36 ACCOUNTING & AUDITING Nonprofit accounting Grant-funded and community-based nonprofits experienced pandemicrelated funding challenges differently. By Denes Tobie, CPA

28 Departments 3 Outlook | chair’s letter 4

In Touch | president & CEO’s message

13 Welcome | new members 20 Memorials | departed members 26 Kudos | members in the news

On Balance

September | October 2021

2021-2022 WICPA OFFICERS/BOARD MEMBERS Chair Angela C. Thomas, CPA

On Balance is published five times a year by the Wisconsin Institute of Certified Public Accountants (WICPA). Change of address should be sent to: Membership, W233N2080 Ridgeview Pkwy, Suite 201, Waukesha, WI 53188; Phone: 262-785-0445 or 800-772-6939; Fax: 262-785-0838; email: comments@wicpa.org. Statements and opinions expressed are those of the authors and not necessarily those of the WICPA. Publication of an advertisement does not constitute an endorsement of the product or service by On Balance or the WICPA. Articles may be reproduced with permission. © Copyright 2021 On Balance.

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OUTLOOK | CHAIR’S LETTER “We’re all in this together, so let’s take advantage of the resources the WICPA puts at our disposal.”

We’re All in the Same Boat

ave you ever made a new acquaintance, told them you were a CPA and then had them ask you about busy season? I think it happens to us all. But while many CPAs work in tax, many of us do not. I currently work in state government, an area that includes only 2% of licensed CPAs. I often speak to students of all ages about working in government, intending to increase their knowledge and let them know of the abundance of opportunities available. All levels of government need accountants to ensure your collected revenue is being spent efficiently and effectively and expenditures are minimized. While there are some differences between government and other industries, the big one is that federal, state and local governments use “fund accounting,” a system that records resources that have been limited by the donor, grant authority, governing agency; or other laws, individuals or organizations. In my job as a financial manager at the Wisconsin Department of Natural Resources (DNR), not only do I get to do the work I enjoy — managing our expenditures and revenues — but I am supporting efforts to preserve and enhance the natural resources of Wisconsin and provide opportunities to Wisconsinites to enjoy the great outdoors. The Natural Resources Board establishes policy for the DNR and consists of seven citizen members who are appointed by the governor with the advice and consent of the Senate. The department is organized with a headquarters office in Madison, five regional offices and over 165 field stations and offices. You may well have taken part in one or more of the following areas that the DNR oversees: State parks: The Wisconsin state park system provides places for outdoor recreation and for learning about nature and conservation. State parks, forests, trails and recreation areas have seen an increase in visits this past year, and I hope that trend continues.

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Fishing: Wisconsin is a top fishing destination with its unique combination of lakes, streams and rivers, and easy fishing access. In Wisconsin, kids 15 years of age and under fish without a license every day. So do anglers born before 1927. Hunting: Hunters across the state anxiously await their favorite time of year. The DNR is actively working on an initiative to recruit, retain and reactivate hunters, anglers, trappers and shooting sports participants. Recreation aside, on the business front I am hearing from CPAs across all industries that we are all facing similar challenges in hiring and staffing. Government agencies were put under a hiring freeze during the unprecedented pandemic, too. It will take time, attention and targeted efforts to rebound. But here are a few ideas to help in this process: • Check out WICPA Connect at wicpa.org/connect. The WICPA can be a resource to connect people and ideas. • Attend WICPA business and social activities so that you can personally connect and discuss how others are handling this issue. We need to be active in our networking efforts. • Utilize the WICPA in your recruitment efforts by posting open positions in the Career Center on the website. • Stay connected and keep up on the latest information shared by the WICPA. We are dedicated to being inclusive and helping to build our future pipeline. We’re all in this together, so let’s take advantage of the resources the WICPA puts at our disposal. Angela C. Thomas, CPA, is the expenditure and revenue accounting section chief for the Wisconsin Department of Natural Resources. Contact her at 608-318-3881 or angela.c.thomas@gmail.com.

On Balance

September | October 2021

IN TOUCH | PRESIDENT & CEO’s MESSAGE “One of the WICPA’s most important functions as a membership organization is to empower members to connect.”

Have you connected?

s a WICPA member, you are part of a community. One of the WICPA’s most important functions as a membership organization is to empower members to connect — to provide you with opportunities to collaborate, socialize and celebrate with your fellow members. One of those opportunities is WICPA Connect. This member-only online community is a primary benefit to learning and connecting with others in the profession. It includes your interactive member directory, where you can find and chat with members across the state. Connect is your link to discussing professional issues, posting questions, and sharing ideas and knowledge within a secure space. This easy access tool allows WICPA members to conveniently connect for conversations and questions. You can also contribute and download resources such as documents, whitepapers, articles, reports, guides and more! Do you have a question on an IRS rule, refund claims or the employee retention credit? Do you wonder how companies are handling the changing COVID guidelines? Reach out to fellow

members on WICPA Connect to find answers from those who may have been in the same situation. Perhaps you have the knowledge and expertise to answer questions and offer insights to others. Or maybe you just want to follow the many other discussions to prepare for similar situations you may encounter. The online community gives you the ability to participate in or initiate discussions that are important to you. You control how often you receive email alerts and can even choose if you want a daily or weekly summary. You can also personalize your profile by adding your interests, education, experience, honors, your photo — you can even earn badges! Show your support for the profession by sharing your knowledge and experience with members in the online community, and let the connecting begin at wicpa.org/connect! Tammy J. Hofstede is president & CEO of the WICPA. Contact her at 262-785-0445 ext. 4518 or tammy@wicpa.org.

Audited financial statements approved for fiscal year ended April 30, 2021 The Finance Committee of the WICPA Board has reviewed and approved the WICPA audited financial statements for the fiscal year ended April 30, 2021. The WICPA Educational Foundation Board has reviewed and approved the audited WICPA Educational Foundation financial statements for the fiscal year ended April 30, 2021. Members may request a copy of the audited financial statements by contacting WICPA President & CEO Tammy Hofstede at 262-785-0445 ext. 4518 or tammy@wicpa.org.

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September | October 2021

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On Balance

September | October 2021

CERTIFIED UNCONVENTIONAL By Marcia Tillett-Zinzow

auren Poppen, CPA, holds the title of CFO at The Equitable Bank in Milwaukee, but she once held the title “Fancy Pants” when she was in high school in Hampshire, Illinois. In fact, in her senior year she was voted “most individualistic” — and there is no question that the label fit. “I think I’ve just always been a little bit quirky,” she said. “In high school I liked to wear crazy patterns of pants — and the shirts I wore probably didn’t match them.” In college, she didn’t have a colorful name, but she confesses to having a lot of different colors of hair. That she’s not an artist surprises people, especially when she tells them she’s a CPA. “Maybe I just like colors!” she said. That assessment is obvious when you drive by her house in the Grasslyn Manor neighborhood of Sherman Park in Milwaukee and see a handpainted mannequin wearing a rebar hoop skirt next to the front door. And she’s working on finishing another one, which currently resides in her living room. Poppen bought the two mannequins from Boston Store when the retail chain closed in 2018. On a lunch hour, she went to the Mayfair store just to see what was on clearance and saw that the fixtures were also being sold. “My brain just went, I need to buy mannequins so I can paint them and put them in my front yard. It just seemed like it needed to be done,” she said.

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September | October 2021

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Photography by Rick Swearingen wicpa.org

On Balance

September | October 2021

Poppen thinks the idea was likely inspired by Chicago’s “Cows on Parade,” Madison’s “Bucky on Parade” and Milwaukee’s “Beasties” — fun, colorful art objects installed throughout the cities for people to enjoy. People who drive through her neighborhood enjoy the surprise, sometimes stopping to take pictures. “There are even some families that made passing by the house a more regular stop on their walking route because their kids like to see the mannequin,” she said. Just like pets, the mannequins have names. “Irene is the one in the front yard,” she said, “and the hexagon mannequin in my living room is Veronica.” That one is her favorite because of the hexagons but also because she really likes statistics and random sampling, she said. “Veronica is more my style of art because it has a lot of rules. For example, hexagons are almost a perfect shape when it comes to filling space and efficiency. And I have placed them randomly. I have a box of 48 different colors of paint, and I used a random number generator to give the paints an order. That is how I went around and painted the hexagons,” she said. “I like that whatever the universe wanted it to be is just what Veronica is.” Poppen said it takes about a year to paint each mannequin because of the other demands on her time — like work and other personal pursuits.

Work and other endeavors Poppen graduated from Rockford College with an accounting degree in 2006, immediately going to work for McGladrey & Pullen LLP in Rockford, Illinois. The firm had a program whereby employees who had been there for at least two years could take a leave of up to five years and be guaranteed a job when they returned. So Poppen took a year off in 2008–2009 to do volunteer work in Milwaukee. But when she was ready to come back, the firm was getting ready to cut jobs nationwide, and she found she had no job to go back to. “I applied for jobs in both Rockford and Milwaukee,” she said. “I got a job offer in Milwaukee but none in Rockford, so I stayed.” She was hired by M&I Bank as an internal auditor and stayed until 2013. In 2014, she joined The Equitable Bank as assistant controller. Five years later, just as the bank was moving through a stock offering, the controller position was vacated, and Poppen moved into it. About a year later, the person who was CFO was promoted to president & CEO, and Poppen was offered her position. She took it on last July.

On Balance

September | October 2021

“

It’s also really nice to know that we’re having impact in the community, whether it’s walking a first-time homebuyer through the mortgage process or working with ACTS Housing and other programs to help people get grants for down payment assistance.

Poppen said she enjoys the challenge of the work she’s doing at the bank, but she also really likes the environment of a community bank. “It’s a small workforce, and I’m able to know all of my employees pretty well. It’s just a positive working environment,” she said. “It’s also really nice to know that we’re having impact in the community, whether it’s walking a first-time homebuyer through the mortgage process or working with ACTS Housing and other programs to help people get grants for down payment assistance.” She is also an entrepreneur of sorts as part owner of the Greenbush Growing Co-op, a community farming venture and CSA (community-supported agriculture, which allows consumers to buy locally grown foods). In December 2020, she and a group of friends purchased land in Plymouth. This is their first year of having a CSA, which is fairly small with about 30 full shares. Poppen is “kind of the on-site food preservationist” of the group, partly because she doesn’t live in the farmhouse with other owners. “While I’m not directly accessible to help with chores every day, I do try to get up there at least once a week to spend time with the group,” she said. The night before she was interviewed happened to be the night the Milwaukee Bucks won the NBA Championship, and she was in the process of preserving 15 to 20 pounds of garlic scapes, so she missed the game. “I heard my neighbors setting off fireworks, so I assumed they won,” she said.

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Love for community Poppen loves living in Sherman Park. “It’s a very diverse and friendly community,” she said. “I’ve been spending a lot more time working on my yard this year, and I probably have met more neighbors than I have over the last four summers combined. There are a lot of people who really care about the neighborhood.” Currently, Poppen is working on restoring her depressionera house (built in 1931) to its original 1930s flavor. There are some things that she won’t have to do; for example, the interior woodwork has never been painted, so it’s all natural. Other things, such as taking up all the tile, linoleum and carpet to expose the wood floors, she’s already done. “I had those refinished,” she said, “and I hired a company to refurbish all of my storms and screens when I had the house painted.” The house is brick, but all the trim had been painted bright blue, and Poppen wanted a more historically appropriate color palette “and also to have more than one color on the trim, as that’s generally how houses were in the ’30s,” she said. “So I had it painted in two tones of color. I was going to do that myself, but after things got busier with the stock offering at work, I decided that was never going to happen.” As for the mannequins, she’s still trying to find time to finish Veronica’s hexagons and install her in the front yard with Irene. And she would like to place another mannequin — one that is seated — in her backyard. “I don’t know where I can find one other than the internet, but I’m hoping there is a local fixture store that might have one. The only one I knew about closed during COVID,” she said. So if you know anyone with a spare seated mannequin …

Marcia Tillett-Zinzow is a Wisconsin freelance writer and editor. Contact her at mtzinzow@icloud.com. The statue to Lauren’s right was built (hornless) by The Skrauss, a Milwaukee artist and Poppen friend, and it had been installed on Milwaukee’s Riverwalk until authorities made him remove it. Poppen added the horns so she could use the statue as Krampus — a European legendary creature who scared misbehaving children at Christmastime.

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On Balance

September | October 2021

Making Sense of

Sliding Statistics Is the CPA credential slipping behind in the race for relevance? Condensed from “A CPA Pipeline Report: Decoding the Decline,” an Insight Special Feature published by the Illinois CPA Society.

E 10

arning the CPA credential has historically been one of the most notable ways to establish a professional identity and exhibit a high level of competence in the accounting profession, yet we are witnessing a nationwide decline in not just new CPAs but also accounting program enrollments.

who are “opting to enter or remain in the workforce in lieu of pursuing an advanced accounting degree or to pursue other avenues for advanced education.” It is also widely acknowledged, though rarely discussed, that less than half of all accounting graduates ever sit for the CPA exam — and even fewer ever pass it.

According to the most recent AICPA Trends Report published in 2019 — a comprehensive biennial report tracking the supply and demand of U.S. accounting graduates — projected bachelor’s, master’s and Ph.D. accounting enrollments were down 4%, 6% and 23% in 2018, respectively, and the number of new CPA Exam candidates hit a 10-year low. The AICPA suggests the continued declines are being driven by “both economic conditions and an expansion of the alternatives available” to potential accounting students,

The 2019 AICPA Trends Report also reported declining demand for new accounting graduates, with U.S. public accounting firms reducing hiring of accounting graduates by 11%. While not a troubling statistic on its own, it builds on a downtrend. Combined, the AICPA’s last two Trends Reports paint a dire picture — an approximate 30% slide in the hiring of new accounting graduates by public accounting firms. Meanwhile, their non-accounting recruits made up 31% of all new graduates hired — a 55% increase over prior levels.

On Balance

September | October 2021

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Compounding the CPA pipeline’s troubling outlook is the waning presence of CPAs at the most visible and influential level of corporate finance — the CFO. In “Why You Don’t Need to Be an Accountant to Be a CFO,” the Wall Street Journal’s Mark Maurer highlights that just 36% of CFOs at the 1,000 largest U.S. public companies were CPAs in 2019, which is the lowest figure in the six years Korn Ferry has collected the data. Maurer reports: “Executives and recruiters trace this evolution to the aftermath of the global financial crisis, when companies increasingly wanted strategy-focused CFOs who would promote transparency and operational changes to spur growth and guard against threats. That was a change from the years after the 2002 Sarbanes-Oxley Act, when companies — under pressure to improve their financial reporting — often picked chief accounting officers as their finance chiefs.” Clearly, corporate America does not think of CPAs as “strategic.” Many in and close to the CPA profession tend to make various anecdotal assumptions about what really influences the ebb and flow of the CPA pipeline: The 150-credit hour requirement is the biggest barrier; the CPA Exam is too hard and outdated; earning the CPA credential takes too much time and costs too much money; other credentials have become more meaningful. None of these factors are new to the landscape. The truth is there have always been challenges that accompany becoming a CPA, and there have always been a variety of career paths and credentials for accounting students and professionals to pursue. So, why has interest in the CPA credential seemingly driven off a cliff in recent years? We must get away from supposition. We must ask those who can definitively answer why, so that is what we did. With input from various regional and national stakeholders, the Illinois CPA Society (ICPAS) developed a survey targeted toward accounting students, graduates and professionals under the age of 35 — including CPAs and non-CPAs — with the aim of gaining insight into what is truly driving the decline in individuals pursuing the CPA credential and understanding why so many accounting students and young professionals either do not finish the CPA Exam or never take it at all. Adding to the challenges of bringing more people into the CPA pipeline are the facts that the likelihood of becoming a CPA drops dramatically after age 22; many respondents do not have an interest in pursuing a credential at all; and accounting, auditing and tax preparation are the words most associated with the CPA credential, further narrowing the credential’s scope and attractiveness. As the survey findings shared in the report show, reversing the CPA credential’s downtrend will not be without its challenges. The race for relevance is faster and more competitive than ever. Our hope is that the firsthand insight gleaned from our survey respondents (versus our own suppositions) will aid us in fulfilling our organization’s mission of “enhancing the value of the CPA profession” and help all stakeholders in their efforts to develop effective strategies for both promoting the CPA credential and ensuring its sustainability and relevance for more generations to come.

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“

Contrary to popular belief, the costs associated either with obtaining the additional credit hours to meet the educational/licensing requirements or preparing for and taking the CPA Exam were not the top barriers cited among any respondent category. Top-Level Highlights of the ICPAS Research Challenges By and large, the most faced or anticipated barrier to becoming a CPA cited by respondents is the time commitment needed to study for and pass the CPA Exam. In fact, workload time commitment was by far the top reason for deciding not to complete the CPA Exam by those who started the process but did not complete the exam. Importantly, when breaking out responses from the individuals who do not plan to become CPAs, we gained the invaluable insight that their top reasons for not pursuing the CPA credential included not seeing value or relevance to their careers, not seeing the return on investment, their employers or prospective employers do not require it, and other credentials or specialties are more valuable to their careers. Contrary to popular belief, the costs associated either with obtaining the additional credit hours to meet the educational/licensing requirements or preparing for and taking the CPA Exam were not the top barriers cited among any respondent category. Perceptions A key goal of this survey was to understand how accounting students, graduates and young professionals value the CPA credential itself and if it is perceived to provide personal value to them. As expected, we clearly validated that the CPA credential’s perceived value directly aligns with one’s interest in becoming a CPA. More than 95% of respondents who are CPAs, are in the process of becoming CPAs and are planning on becoming CPAs rate the credential as valuable or very valuable. Encouragingly, 86% of respondents who are still unsure about becoming CPAs view the credential as valuable or very valuable. And, surprisingly, the CPA credential is even acknowledged as being valuable or very valuable among those who started but

On Balance

September | October 2021

did not complete the CPA exam (65%) and those who do not plan on becoming CPAs (68%). Respondents who see little or no value in the CPA credential feel they can be successful in their anticipated or chosen careers without it and ultimately perceive that any value the CPA credential holds is outweighed by its lack of relevance to their personal endeavors and the time and costs required to obtain it. Of further concern is the finding that 51% of all respondents have not obtained nor plan on pursuing other credentials — this was equally measured among respondents who do not plan on becoming CPAs (50%). Influencers Contrary to the common belief that an employer or prospective employer is the leading influencer on an accounting student’s or young professional’s decision to pursue the CPA credential, most respondents (53%) cited “self ” as their primary influencer. As suspected, employer/

prospective employer (39%) was validated as a significant influencer, which was closely followed by college professor (33%). It is worth noting that educators did outrank employers among respondents who plan on becoming CPAs and who are still unsure about becoming CPAs. Also challenging common belief was the fact that a higher-than-average salary was not identified as a top factor in deciding whether to become a CPA. Instead, career advancement opportunities earned the largest response, which was followed by greater marketability. In addition, we found a clear correlation between respondents either working or preferring to work in public accounting and deciding to pursue the CPA credential. Interestingly, though, just 27% of all respondents see themselves spending most of their careers in public accounting. Condensed with ICPAS permission. To see the report in its entirety, visit www.icpas.org/cpapipeline.

Welcome new members! Get to know the newest members of the WICPA. April 1, 2021 – July 31, 2021

Christina N. Agapito

Brady Bemis CLA

Brian R. Bulgrin Deloitte & Touche LLP

Clifton R. Davis Deloitte & Touche LLP

Tristin A. Esker RSM US LLP

Melissa N. Bender Hjortness & Associates

Shaun Byrnes Ultratec Inc.

Julie Dawson Carthage College

Chase S. Fangmeier Baker Tilly LLP

Kimberly L. Berg Baker Tilly LLP

Adam Carney KPMG LLP

Makaela K. DeBoer MBE CPAs LLP

Amanda T. Fiorentino Deloitte & Touche LLP

Alexander M. Bolle Wipfli LLP

Lekha Chari CLA

Claire E. Del Vecchio RSM US LLP

Lynn Fischer Kimberly High School

Jacob N. Barthels CLA

Joshua C. Bollig Wegner CPAs

Tyler J. Cizek BDO USA LLP

Adam DeMaster

Sarah Fleischmann

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Theresa A. Bolog BKD LLP

Brendan Clementi

Jared R. Denu Deloitte & Touche LLP

Molly R. Fonk Briggs & Stratton Corp.

Stacie A. Basler Fond du Lac County

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Nicole M. Boucher CLA

Allison R. Drost Two Rivers Accounting LLC

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Madelyn Craig, Scribner Cohen and Co. S.C.

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Devin G. Cribben Vrakas CPAs + Advisors

Quinn Dugan SVA Certified Public Accountants S.C.

Jessica Albrecht Wipfli LLP Emily J. Andersen YMCA of Dane County Lisa K. Bammert Ameritech College of Healthcare

Lori M. Beil Caitlin Bell Deloitte & Touche LLP Lacey E. Bell Security Health Plan of Wisconsin Inc.

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Michael J. Brazzale

Ann-Marie Curtin CLA

Sara M. Brown VF Corp.

Josh P. Czerwinski Deloitte & Touche LLP

Steven A. Edwards Compeer Financial

Rebecca A. Buckley Meicher CPAs LLP

Matthew B. Davies Molson Coors Beverage Co.

Kailey El Meddah Chippewa Valley Bean Co. Inc

September | October 2021

Amy A. Edwards

Jody Frantz CLA Dana Franzowiak Daniel J. Frawley Alliant Energy Corp. Matthew Frisone Joshua I. Fuiava SCL CPA PC Tori E. Geraldson Deloitte & Touche LLP

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Jaclyn M. Morell Molson Coors Beverage Co.

Phil Rinzel Northwestern Mutual

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Oluwatomisin A. Ladeinde Molson Coors Beverage Co.

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Christine Robinson Deloitte & Touche LLP

Katlynne M. Swichtenberg Mayo Clinic

Matthew Langer RitzHolman CPAs

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Faiq M. Syed Derco Aerospace Inc.

Megan M. LaPlant CLA

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Camille Lapp Baker Tilly LLP

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Tyler F. Nack XeteX Inc.

David J. Lisk City of Fond du Lac

Dan L. Nash Deloitte & Touche LLP

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Matthew R. Lorenz RitzHolman CPAs

Timothy J. Neuenschwander Neuenschwander Asset Management LLC

Wendy S. Mallo CLA Douglas J. Mancl Red Flint Group LLC Benjamin R. Manley Wipfli LLP Becky Marquardt New London High School Eric J. Marshal Deloitte & Touche LLP

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Christopher Martin Wisconsin Office of the Commissioner of Insurance

Brendan D. Paule Ernst & Young LLP

Che R. Martinson Jack Marx Roberts, Ritschke & Tyczkowski Ltd.

Jodi B. Payne SVA Certified Public Accountants S.C. Eric G. Pearson Foley & Lardner LLP

Lance D. Massie

Casey C. Perkins

Erin M. Johnson Integrity Audit & Tax LLC

Jake McElmury Deloitte & Touche LLP

Shaun M. Pieper Ascent Global Logistics

Griffin M. Johnson Baker Tilly LLP

Matthew McInnis Ernst & Young LLP

Tammy L. Pinno-Supple Fond du Lac County

Jackson C. Jordan CLA

Steven S. McKenna

Andrew Platta CLA

Ellie E. Kalamarz Lakeshore Recycling Systems Katie Kampfer CLA

Logan A. McNamer CLA Natalia A. Meicher Meicher CPAs LLP

Elizabeth Podvin Oshkosh West High School David J. Porter KPMG LLP

Elizabeth A. Keegan

Tanner J. Meinholz Meicher CPAs LLP

Chaz Kestly CLA

Jacob R. Mende PwC

Daniel Kieffer Deloitte & Touche LLP

Carol S. Mentink CLA

Jessica Rabay Deloitte & Touche LLP

Jason B. Kiehnau CLA

Samantha A. Metcalf CLA

Paige E. Radaj CLA

Jarod Kimmes CLA

Nicole M. Middleton CLA

Catherine Raynor Hy Cite Enterprises LLC

Nicholas J. Knuth Baker Tilly LLP

Calahan K. Miller Kerber, Eck & Braeckel LLP

Brian T. Reinke CLA

Seth P. Kopczynski CLA

Charles J. Minesal Jr.

Madeline Reschke

Jessica J. Mogensen, CLA

Travis P. Richert Hy Cite Enterprises LLC

Kayla M. Kryszak CLA

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Matt Posillico Connect Search LLC Alyssa Prodoehl

Luke Romens The Siegfried Group

Erik M. Sylte CLA

Gina M. Roose Kohler Co.

Alicia G. Thibado CLA

Matthew D. Ropel Johnson Controls Inc.

Patrick J. Tokarski CLA

Ryan Rose CLA

Josh Tomsovic Two Rivers Accounting LLC

Jennifer N. Rumbold Silver Star Brands

Zachary D. Trautsch CLA

Hunter Sadler Harmanjit S. Saini Gavin Salvia Johnson Block & Co. Inc. Jack O. Sauer CLA

Andrew P. Traxler KPMG LLP Ha T. Truong RitzHolman CPAs Jeffrey Ullrich Corporate Valuation Advisors

Anthony J. Scaffidi Deloitte & Touche LLP

Tyler J. Vande Voort CLA

Garth D. Schanock Baker Tilly LLP Thomas A. Schimp Scribner, Cohen and Co. S.C. Kayla Schmidt Johnson Block & Co. Inc. Kaysie M. Schultz CLA David M. Schumerth Flair Flexible Packaging Corp. Lindsey T. Schwellinger Deloitte & Touche LLP Rodney C. Scott RCS CPAs PLLC

Cameron J. Vander Zanden Arrowhead Conveyor Corp. Jordan Varish CLA Amy M. Vehrs CLA Cathy J. Vicary CLA Joseph E. Villicana Advicent Solutions Jordan J. Waech CLA Dania H. Wahdan Sitzberger & Co. S.C.

Jeremy R. Singer Poly

Zhifei Wang Deloitte & Touche LLP

Abijeet Singh RitzHolman CPAs

Tara Watterson Accourage CPA LLC

Ethan M. Sisko CLA

Hunter Weckerly Melissa P. Werner Leaf, Miele, Manganelli, Fortunato & Engel LLP

Miaoyin Situ Ashlyn M. Smith CLA

Maxwell C. Williams Perlick Corp.

Brian M. Smith CLA Kate L. Spiegel

Steve Willis Random Lake High School

Roxanne M. Stelter Molson Coors Beverage Co.

Richard W. Wingate De Loach, Wingate & Co. P.C.

Scott M. Sternhagen CLA

Eric J. Winkler CLA

Ryan A. Stigen, Huberty & Associates, S.C.

Nicole M. Wolf CLA

Laura Stingley CLA

John J. Zelenak CLA

Graig Stone Sheboygan South High School

Seth A. Zipperer CLA

Lynn D. Streich CLA

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SURVIVING THE

RANSOMWARE SIEGE How prepared is your organization?

By Jeffrey T. Lemmermann, CPA, CITP, CISA, CEH

t some point in 2015, cybercriminals had an aha moment. Instead of going through all of the trouble of breaking into a network, stealing data and then executing a complicated scheme to monetize that data, they found a shortcut — and it was already paved.

Data encryption was touted as a defense against attempts to steal data, and companies implemented encryption to keep their data safe. It did not take long for the bad guys to figure out a way to turn those defenses around: Encrypt the data and hold the key for ransom. Already armed with methods to trick users into running things they should not, attack methods were created that locked companies out of their own computers, data stores and applications. Faced with the prospect of being without key systems and data for long periods of time, criminals offered a quick fix: Pay us to fix it. Insurance companies often encouraged

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payments, calculating that it was more economical to pay upfront than to pay for rebuilding systems, covering lost revenue and buying new equipment. The result was predictable. Criminals saw big pockets behind the companies they were attacking. They widened their attacks and increased the ransom demands. More criminals got into the game, realizing how profitable this venture was becoming.

How to measure your readiness Preparing for these attacks relies on basic cybersecurity hygiene. At its core, a ransomware attack is just a variant of a malware attack, relying on the same weaknesses that malware attacks have needed for many years. The results of the attack, however, require new considerations. The biggest question that companies are asking today is this: “Can we survive a ransomware attack?” To answer that, it is best to break the threat down to four questions: 1. Can we protect against the attack? 2. Can we detect the attack? 3. How do we respond to the attack? 4. If the attack is successful, how will we recover?

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Protect The components of protection should be familiar, as they are the basic hygiene items needed to stop any cybersecurity threat: Rights management

• Privileged access or admin access to devices throughout the network should be limited, with specialized accounts set up for local administrator tasks. When many users have admin access to many machines, ransomware spreads like wildfire. • Access to file shares across the network should be only as-needed. Ransomware will look to encrypt whatever files the user who launched it can see and change. If the infected user has limited rights on file shares, the damage that can be caused will be limited.

“

How an organization responds to a ransomware attack directly affects the amount of system damage caused by the attack.

Patch management

Malware normally finds its way onto computers that are missing patches. Ransomware is no different; yet patching continues to be a shortcoming in many organizations’ defenses. The keys to having an effective patch management program are to: • Ensure ALL operating systems and platforms are covered by an automated patching system. • Ensure ALL applications are covered by an automated patching system. • Perform scans routinely on all systems in the environment to confirm the automated patching systems are functioning as intended.

1. Have a correctly configured Security Information and Event Management (SIEM) tool.

Endpoint protection

Organizations need to have current and up-to-date technology defending endpoints. Anti-virus applications installed and forgotten five years ago do not meet this requirement. Make sure the endpoint protection system is actively monitored to ensure components are current and protections are not disabled. Network segmentation

When commercial buildings, hotels and homes are built, codes have to be followed for a number of reasons, one of which is to ensure that fires have difficulty spreading from room to room and floor to floor. A computer network should be no different. Networked devices in one department should be able to see networked devices in another department only if there is a justified business requirement.

Detect One of the most important aspects of limiting the damage of a ransomware attack is to know when it is happening. Following are the key steps to sharpening any company’s detection capabilities:

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SIEM tools collect logs from a variety of sources. But a SIEM is like a musical instrument. It will be a dust collector unless someone knows how to play it. SIEMs prove their worth when they are configured to analyze the logs and produce alerts directed to the right people. Instead of having people who pore through logs looking for problems, a finely tuned SIEM is a force multiplier, sending the right information to the right people to allow them to troubleshoot and prevent problems before they escalate.

2. Conduct realistic tabletop exercises.

Many organizations go through the exercise of bringing people into a room to talk about a possible scenario and find out what will be done. Very few organizations integrate actual actions, such as retrieving log information or confirming SIEM notices as part of the exercise. Put realism into these exercises by having simulated attacks during the tabletops to prove your detective measures are working.

Respond How an organization responds to a ransomware attack directly affects the amount of system damage caused by the

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attack. That response also affects the damage to its reputation with customers and the morale of its employees. This is where a formal incident response plan (IRP) is essential. The basic components of the IRP should include: • Defined members of an incident response team (IRT). • Contact information for external resources (such as the media, law enforcement and third-party consultants). • Templates for communicating with employees, customers and vendors. Specific to ransomware, the IRP should have a playbook for procedures related to a ransomware attack. Such a playbook can be designed through a tabletop ransomware exercise. This playbook will be unique to the organization with steps specific to the IRT members. Steps should include: • User actions when ransomware is suspected. • Specific steps for isolating network segments or systems. • Communication steps with members of the IRT.

Recover Recovering from a ransomware attack normally involves one of three options. 1. Recover via backups. To be viable, backup systems and images cannot be compromised by the ransomware. Attackers will often look to encrypt backup systems first so that a system restore is not possible. To protect the ability to recover systems and data, organizations should: • Maintain protected gold images of systems to ensure restoration to a known trusted state. • Keep copies of data backups that cannot be overwritten and are disconnected from the production network. 2. Pay the ransom.

Some companies are forced into this solution. Some look to it as the path of least resistance. There are risks that come with this choice: Will the decryption key be effective?

Criminals realized early on that it is more profitable in the long run to provide the key. That does not mean it will be useful. In the case of the recent Colonial Pipeline attack, a large payment was made only to find the decryption tool was too slow to be of use (Morse, 2021).

Unfortunately, if you’re attacked once, you may be attacked again. A recent report indicated that 80% of businesses that paid to recover from an attack experienced a subsequent ransomware attack (Yu, 2021).

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3. Rebuild from scratch.

This is the most painful scenario, normally chosen when backups cannot be restored and/or the purchased decryption key is not working.

What next? Hopefully, this guide helps you to understand and prepare for these attacks. The tactics of the criminals continue to escalate with the release of captured data and the use of personal attacks on corporate executives to compel payment. Our efforts to resist need to meet these threats. Here are two resources to help in the fight: • The website “No More Ransom!” (www.nomoreransom.org) contains resources to help victims retrieve their data without paying the criminals. Tools include working decryption keys for known ransomware variants. • In June 2021, the National Institute of Standards and Technology (NIST) released a draft of a framework to use in managing risks associated with ransomware. This is a free resource which can be accessed here: https://csrc.nist.gov/CSRC/media/Publications/nistir//draft/ documents/NIST.IR.8374-preliminary-draft.pdf Jeffrey Lemmermann, CPA, CISA, CITP, CEH, is an information assurance consultant with SynerComm, a network engineering and cybersecurity business based in Brookfield. Contact him at 262-373-7100 or jefffrey.lemmermann@synercomm.com.

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IDENTITY THEFT HAPPENS

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THE ENHANCED

EMPLOYEE RETENTION CREDIT Opportunities for employers

E By Jim Brandenburg, CPA, MST

nacted in December 2020, the Consolidated Appropriations Act 2021 (CAA) intends to provide COVID-19 relief to individuals, businesses, health care providers and more. The legislation offers nearly $1 trillion in relief. Coupled with the Coronavirus Aid, Relief and Economic Security (CARES) Act and other bills passed this year and last year, Congress ushered in nearly $5 trillion in stimulus and relief.

There were several provisions introduced in the CAA that were designed to assist struggling businesses. One of the more significant opportunities included an enhancement of the employee retention credit (ERC) under the CARES Act. The CAA made key changes to the credit, impacting both businesses and employers. This article addresses these changes and highlights how employers can realize new savings.

Background The ERC provides an incentive for employers impacted by the pandemic to retain their workforces. The focus of the ERC, as with the Paycheck Protection Program (PPP) loan, was to keep employees working. Designed differently than the PPP loans, the ERC offered payroll tax credits that could be realized immediately by employers when meeting various

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requirements (rather than through a government loan). While structured differently, the ERC and PPP loans shared a common goal of paying employees. The CARES legislation stipulated that an employer could not obtain a PPP loan and an ERC. However, a monumental change made by CAA now permits employers to claim the ERC even if they received a PPP loan — for both 2020 and 2021. Please note that while an employer can now obtain both a PPP loan and the ERC, they cannot claim the ERC on the same wages that were forgiven for PPP loan purposes. As a result, an employer might seek to specify nonpayroll costs (up to the 40% threshold) as part of their PPP loan forgiveness application. The ability of an employer to claim the ERC in 2020 or 2021 is causing many employers to evaluate the ERC in 2021, reevaluate 2020 and possibly amend their 2020/2021 payroll filings. The ERC presents the following key hurdles for employers to navigate:

Eligible employer An employer is entitled to the ERC if they have met one of two requirements: (1) They experienced a significant reduction in gross receipts (> 50% in 2020; but only > 20% in 2021) in a calendar quarter compared with 2019, OR (2) their business operations were fully or partially suspended by a government order imposing restrictions by curbing travel, commerce or group meetings because of the pandemic. The reduction in gross receipts test is mechanical and straightforward in its application. The CARES Act, however, did not clearly define provisions concerning the full or partial suspension of operations; but the

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IRS did issue Notice 2021-20 to offer guidance and examples on when the ERC is or is not available.

working and being paid, for large employers, these wages are generally not eligible for the ERC.

Qualified wages for ERC

Employee wages

A key feature of the ERC is determining whether the employer is a small or large employer. For 2020, a small employer is one with 100 or fewer employees, while in 2021 a small employer is defined as 500 or fewer employees. Congress uses full-time employees as defined in Section 4980H established by the Affordable Care Act for this calculation. The distinction between a small and large employer is critical in determining the ERC:

After identifying which employee wages are entitled to the ERC, the wages are limited to $10,000 per employee per year in 2020; this is expanded to $10,000 per employee per quarter in 2021. Finally, the ERC credit factor is applied. The ERC factor is 50% in 2020 but rises to 70% in 2021. Thus, the maximum ERC is $5,000 per employee in 2020 ($10,000 x 50%) but jumps to $28,000 per employee in 2021 ($10,000 x 4 x 70%). It is important to note that employee wages for ERC purposes include “qualified health care plan costs.” The IRS specifies that the amount of qualified health plan expenses considered in determining the amount of qualified ERC wages “generally includes both the portion of the health care costs paid by the eligible employer and the portion of the

• Small employer: Wages paid to all employees are eligible for the ERC, whether the employee is working or not. • Large employer: Only wages paid to an employee for not working are entitled to the ERC. If the employee is

COMPARISON CHART: PPP AND ERC

WITH KEY TERMS FOR PPP LOANS AND EMPLOYEE RETENTION CREDIT (ERC) - UPDATED MARCH 29, 2021

PPP LOAN

Number of Employees Employee Count - How Determined Employee Count - When Determined Affiliations - Employee Count Affiliations Determination Eligible Organizations Gross Receipts Test Gross Receipts Measurement Period

EMPLOYEE RETENTION CREDIT

FIRST DRAW

SECOND DRAW

2020

2021

≤ 500 Employees (a)

≤ 300 Employees (a)

≤ 100 Employees (b)

≤ 500 Employee (c)

Headcount - FT and PT

Average Monthly FTEs (d)

Loan Application Date (Uncertain)

2019

Yes

SBA guidelines (k)

IRS guidelines (§§414, 51)

Business Concerns, Sole Proprietors and Non-Profits (m)

Trade or Business, which can include a Non-Profit (n)

No Gross Receipts Test

≥ 25% Reduction in G/R

> 50% Reduction in G/R

> 20% Reduction in G/R

N/A

By Quarters - 2020 vs. 2019 (h)

By Quarters - 2020 vs. 2019

By Quarters - 2021 vs. 2019 (e) IRS guidelines (§448)

Gross Receipts Definition

N/A

SBA guidelines (k)

IRS guidelines (§448)

Gross Receipts - Affiliations

N/A

SBA guidelines (k)

IRS guidelines

Payroll - Application (l)

2.5 Months - 2019 Payroll

2.5 Months - 2019 or 2020 Payroll (f)

Qualified Wages and Health Insurance

Payroll - Determination

Average Monthly Payroll

By Quarters for G/R; Dates for Shutdown (g)

By Quarters for G/R; Dates for Shutdown

Payroll - Affiliations

Exclude wages of foreign affiliates

Related Party Wages

Permitted

Excluded

$100,000/employee annualized Cap

$10,000 per year

$10,000 per quarter

Eligible Wages (l) Available for Non-payroll Costs?

Yes

Eligible Non-payroll Costs

Rent, Interest, Utilities, PPE costs (j)

N/A

Limit on Non-payroll Costs

40% of total costs

N/A

Yes (unless meet drop in G/R Test)

March 27, 2020

December 27, 2020

March 13, 2020

January 1, 2021

May 31, 2021

December 31, 2020 (i)

December 31, 2021 (i)

Full or Partial Shutdown Required Effective Date of Provision Ending Date of Provision Maximum Loan or Incentive How Incentive Obtained Forms to File Government Oversight

$10,000,000

$2,000,000

No limit

Apply with Bank (& SBA Review)

Tax Filing

No IRS Forms; but SBA Form 3508 Series

Form 941 Series (941, 941X, 7200)

Yes - SBA

Yes - IRS

(j) - Other costs include: Worker Protection – operating or capital expenditures; Property Damage - caused by vandalism not covered by Footnotes: insurance; Supplier Costs – essential to operations; Operation Expenses – business software, etc. (a) - Exceptions: (1) SBA size standards could result in higher employee count; (2) Employee count for NAICS Code 72 (Hospitality) is per location. (b) - 100 or less employees, all employee wages are qualified whether employee working or not. If over 100, then only eligible if paid for NOT WORKING. (k) - See below detailed descriptions. (c) - 500 or less employees, all employee wages are qualified whether employee working or not. If over 500, then only eligible if paid for NOT WORKING. (l) - Payroll costs and qualified wages include health insurance provided by the employer. See IRS Notice 2021-20. (m) - A Non-Profit organization for PPP loan purposes includes: a non-profit organization under Section 501(c)(3); veterans organization (d) - FTEs determined with 30 hours per week as full time, or 130 hours per month. Determined under §4980H. under §501(c)(19); Tribal business concern; housing cooperatives, small agricultural cooperative; eligible §501(c)(6) organization; (e) - Special rule for 2021. Option to also use most recent quarter instead of current quarter’s gross receipts in 2021. This special rule is elective. destination marketing organization; or an eligible non-profit news organization. A new category added called “additional covered (f) - If under NAICS Code 72, then 3.5 months of salary can be used in PPP Loan Application. non-profit entities” applies to non-profits under Section 501(c) other than 501(c)(3); 501(c)(4); 501(c)(6); or 501(c)(19), and exempt (g) - Quarterly wages included through quarter the gross receipts are > 80% of comparative quarter. under 501(a). (h) - As an alternative, the entire gross receipts for 2020 can be compared with 2019. Annual tax filing forms can be used. (n) - For purposes of the ERC, a tax-exempt organization described in Section 501(c) that is exempt from tax under Section 501(a) is deemed (i) - Eligible ERC wages paid through these dates are entitled to the ERC, but claims can be filed after these dates to obtain ERC (amended returns). to be engaged in a “trade or business” with respect to all operations of the organization.

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cost paid by the employee with pre-tax salary reduction contributions.” It does not include amounts paid by employees with after-tax dollars.

ERC mechanics Eligible employers do not need to wait until the end of the year to realize the ERC; instead, they can receive this credit during the year on their payroll tax filings. This would offset the payroll tax deposits. If the ERC exceeds other payroll tax deposits, this amount could be refunded. IRS Form 941, Form 941X and Form 7200 are used to claim the ERC.

Aggregation rules The CARES Act adopted aggregation rules for the ERC that provide that all parties treated as a single employer under the tax law [Sections 52(a) or (b) or Sections 414(m) or (o)] are also treated as a single employer for ERC purposes. The significance of aggregating entities as a single employer is for purposes of addressing the following ERC provisions: • Determining whether the employer encountered a significant decline in gross receipts • Determining whether the employer had a trade or business operation that was fully or partially suspended due to government orders related to COVID-19

• Determining whether the employer averaged ≤ 100 full-time employees in 2020 (≤ 500 in 2021) • Determining the maximum credit amount per employee in 2020 or 2021

Key takeaways The CAA enhancements to the ERC make this a tax incentive nearly every employer should evaluate. Whether an employer obtained a PPP loan or not, we encourage you to consider the ERC for 2020 and 2021. There are many rules to follow in claiming the ERC. Please reference the following helpful resources: • IRS Notice 2021-20 • IRS Notice 2021-23 • IRS Notice 2021-49 • IRS Rev Proc 2021-33 • A side-by-side comparison of the PPP loan and ERC for 2020 and 2021 (pg. 19) James D. Brandenburg, CPA, MST, is a tax partner with Sikich LLP, Brookfield. Contact him at 262-754-9400 or jim.brandenbug@sikich.com.

memorials Eugene M. Recknagel, CPA (1923–2021)

Eugene M. “Gene” Recknagel, CPA, of Waukesha, passed away on Wednesday, Aug. 11, at age 98. Recknagel graduated from Waukesha High School in 1941 and attended Carroll College in 1941 and 1942. He graduated from the University of Wisconsin–Madison in 1948 after serving three years in the U.S. Army as a combat engineer sergeant during World War II. His service time included two years in the Pacific, for which he received four Battle Stars for action on four islands and was awarded the Bronze Star during the Battle on Guam. Recknagel was a retired partner of Ernst and Young and an active member of the WICPA for many years, including serving as board president in 1964–1965 and as WICPA Educational Foundation president in 1974-1975. Throughout his career and retirement Recknagel and his wife of 62 years, Georgia, were longtime active members of Grace Evangelical Lutheran

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Church and members of Merrill Hills Country Club. Recknagel also belonged to many other professional and charitable organizations. He is survived by three children, seven grandchildren, nine great-grandchildren, and other relatives and friends.

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memorials Richard A. Fosso, CPA (1946 – 2021)

Richard A. Fosso, CPA, passed away Tuesday, May 4, at age 74. He earned his bachelor’s degree in accounting from UW–Whitewater. Fosso began his career as vice president of Fiberdome Inc., later sold real estate for First Weber Realty and also maintained a successful tax and accounting practice for 40 years. He served as treasurer of various churches and local organizations and also was president of the Lake Mills Chamber of Commerce. Fosso is survived by his wife, Janet; nine children; nine grandchildren; two sisters; and two nieces and a nephew.

Bart Halderson, CPA (1971 – 2021)

Bart Halderson, CPA, age 50, passed away in early July. He was a tax managing director for BDO USA LLP in Madison. Halderson completed his accounting degree at UW–Madison in 1993 and was licensed as a CPA in 1998 while working for Baker Tilly LLP. He also served on the WICPA Tax Conference Planning Committee during that time. Halderson joined Schenck SC as a tax manager in 2005 and remained in that position until 2014, when he joined BDO USA LLP as a senior tax manager. In November 2020, he was promoted to tax managing director of the firm.

Ralph D. Johnson II, CPA (1957 – 2021)

Ralph D. Johnson II, CPA, passed away on Saturday, June 5. Johnson was a dedicated family man who worked as a CPA from 1978 until retirement. He enjoyed the outdoors and was a lifelong visitor of America’s national and state parks. Many family memories were had on road trips to places such as Cumberland Gap, Boundary Waters, Great White Sand Dunes, Devil’s Lake, Mammoth Cave and many more. Johnson is survived by his high school sweetheart and beloved wife of 41 years, Paula; their four children and seven grandchildren; and his mother and four brothers.

Richard J. Johnson, CPA (1950 – 2021)

Richard J. Johnson, CPA, passed away Tuesday, May 11. He earned a bachelor’s degree in accounting from UW–Madison in 1972 and a master’s in accounting from the Ohio State University in 1973. Johnson’s career began as an auditor with Arthur Andersen & Co. in Milwaukee, where he attained manager status and also obtained his CPA license. For the final 34 years of his career, Johnson was CFO at Barker Pacific Group, a commercial real estate development company based in California. In 2020, he was named Outstanding Alumnus by the Department of Accounting and Information Systems at UW–Madison. Johnson is survived by a sister, two sons, three grandchildren and one great-grandson.

Paul C. McDonald, CPA (1940 – 2021)

Paul C. McDonald, CPA, age 80, died Friday, June 18, at his home in Lac Courte Oreilles. He was a lifetime member of the WICPA. McDonald graduated from Marquette University High School and then earned an accounting degree from Marquette University. He began his career with Arthur Anderson & Co. and worked there as a CPA for two years before moving on to become the CFO of Tews Lime & Cement Co. in Milwaukee, where he worked for 29 years before retiring in 1997. McDonald is survived by his wife of 46 years, Elna; three children; four grandchildren; and nieces and nephews.

David L. Mortensen, CPA (1942 – 2021)

David L. Mortensen, CPA, passed away on Friday, May 21, at age 78. He earned his accounting degree at UW–Whitewater and then went to work for Houghton Taplick & Co. in Madison and ultimately became a licensed CPA. He eventually became a partner in the firm and remained there for 35 years through numerous mergers and acquisitions, ultimately retiring from RSM McGladrey. Mortensen is survived by his wife of more than 57 years, Cheryl; three children and five grandchildren; and a niece and nephews.

William J. Raftery, CPA (1931 – 2021)

William J. Raftery, CPA, passed away on Saturday, June 19, at age 90. Raftery served in the U.S. Army Reserves and afterward attended and graduated from Loyola College of Maryland. He became a CPA and later added a JD from the University of Baltimore. He served as controller for the state of Missouri from 1973–1977 and then entered public accounting, advancing to partner at several firms and ultimately retiring as a partner with KPMG in 1988. In 1989, he became controller for the state of Wisconsin, serving in that post for 18 years before retiring. Raftery is survived by two children; one grandchild; a sister; and his longtime companion, Esther Chapman.

Howard Charles (Bud) Volz, CPA (1929 – 2021)

Howard Charles (Bud) Volz, CPA, passed away Tuesday, April 20. He was 92 years of age and a lifetime member of the WICPA, having joined the organization in 1959. Volz was president of Volz Genrich Co. S.C. in Milwaukee for 30 years prior to his retirement. He loved to travel and had enjoyed more than 90 ocean cruises during his lifetime. In retirement, he enjoyed walking, playing golf and playing blackjack. Volz is survived by his wife of 70 years, Margaret; two sons; five grandchildren; five great-grandchildren; and a sister.

If you are aware of a member obituary and believe it should be included in Memorials, please send a copy of the obituary or contact Marcia Tillett-Zinzow at mtzinzow@icloud.com.

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Coming Together to Advance Black CPAs

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This year marks the centennial of the first Black CPAs. In celebration of that anniversary, we are publishing one of the articles from www.BlackCPACentennial.cpa.

By Anita Dennis

hree leaders of the Black CPA Centennial’s organizing partners — whose everyday missions support and promote the advancement of Black CPAs — offer insights on the main barriers Black professionals face, the roles their organizations play in helping overcome those barriers, and what the CPA profession can do collectively to progress in achieving diversity, equity and inclusion.

The organizations Diverse Organization of Firms (DOF) consists of Black and other minority owners of licensed CPA and financial services firms. DOF offers networking and referral resources as well as professional development and mentorship opportunities. National Association of Black Accountants (NABA) represents Black professionals in accounting, finance and business. Built on the motto “Lifting as We Climb,” NABA provides education, resources and meaningful career connections to professional and student members. National Society of Black CPAs (NSBCPA) aims to increase the number of Black CPAs by providing the most relevant knowledge, resources and advocacy. NSBCPA also promotes cultural competence, diversity and inclusion within the profession.

Recognizing barriers Lack of exposure to the profession and all it has to offer, as well as to the people within it, is a significant hurdle for ambitious Black professionals, according to Guylaine Saint Juste, president and CEO of NABA. College leaders have also told her that sometimes Black students don’t see themselves being successful in the field because of the small number of Black CPAs. Darryl Matthews, NSBCPA president and CEO, agreed. “I grew up in a middle-class Black neighborhood where I saw Black doctors, pharmacists, police officers and teachers,” Matthews said. “But there were not a lot of CPAs.”

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“

Lack of exposure to the profession and all it has to offer, as well as to the people within it, is a significant hurdle for ambitious Black professionals. – Guylaine Saint Juste, president and CEO of NABA

Because of the small number of Black CPAs, school counselors also do not think to direct Black students into the profession, according to Odysseus Lanier, CPA, DOF chair and a partner at McConnell & Jones LLP. According to Lanier, the profession also has not made outreach to younger Black students a sufficient priority.

What the organizations can do To promote greater awareness, Saint Juste thinks a brand campaign could continue to raise the profession’s visibility among Black students — building the same enthusiasm that’s now associated with tech careers — and highlight the many types of roles for accountants and the benefits of an accounting career. Equipping Black students and early professionals to pass the Uniform CPA Examination is a significant concern for the NSBCPA, according to Matthews. He believes the CPA credential provides Black accountants with recognized value that cannot be ignored. “Once you’ve qualified, you are among the best,” he said. “There’s no reason to doubt your capabilities.” The NSBCPA’s CPA Exam Bootcamp Program for Black accounting students offers placement assessment, weekly exam reviews led by Black CPAs, accountability sessions and

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help with applications and test-fee support. Participants also benefit from mentors who offer encouragement and advice. “It’s our responsibility to coach them through or remove obstacles to the process,” he said, including helping them find a career-related internship.

Driving change Once Black students take a job, firms and organizations should ensure that they have the same chances as other new professionals. “If you never work with people of color, you may not think of them as having the technical and soft skills to be successful,” Lanier said. As a result, those staff members may not attract the mentors or sponsors they need to learn the ropes and get the best assignments. “They won’t be able to demonstrate they’re as capable as people who don’t look like them,” he said. Firms and employers aware of these hurdles can take steps to correct them. Those in charge of hiring may be looking for Black aspiring CPAs in the wrong places. The problem, according to Lanier, is that recruiters focus their efforts on schools with majority-white enrollments. Because of the low percentage of Black students in accounting programs at those schools, this approach “is a huge barrier to entry,” he said. As a result, he said recruiters should engage more with historically Black colleges and universities to find the students they are seeking. CPA firms can support the advancement of Black accounting professionals by becoming engaged in these organizations’ work through donations or other types of involvement. The DOF, for example, can connect firms with Black-owned member firms that are available to subcontract. “That exposes firms to the available talent,” Lanier said. “We would like to have more involvement with the largest firms, to have them speak to our membership and learn about our firms and their CPAs’ capabilities.” NABA is interested in helping find ways to broaden the talent pool. For example, NABA would enthusiastically help pilot an effort to expand recruiting to Black liberal arts students and develop innovative ways to offer them the accounting education they need, Saint Juste said.

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The path forward On June 19, 1865, word finally reached Texas that enslaved people in the United States had been emancipated (which took effect more than two years earlier). Since then, the date that has come to be known as “Juneteenth” has been celebrated as the time when emancipation became known throughout the country. On June 17, 2021, Juneteenth was signed into law as a federal holiday. Throughout the year of the Black CPA Centennial, and especially during the month when Juneteenth falls, it’s important to honor those who came before. “John W. Cromwell Jr., Mary T. Washington Wylie, Elmer J. Whiting Jr., William Louis Campfield and Larzette Hale paved the way for Black CPAs — they were heroes,” Matthews said. “They were ordinary people with an extraordinary goal, that being to be the first Black person to achieve a distinction that others before them were not allowed to achieve.” “We have a long, winding road to go down,” Lanier said. “We have to go forward with the same degree of grit and fortitude.” The result will be positive for the profession and for the Black professionals who seek to join or advance in it. The organizations in this article are continuing to support Black CPAs and accountants as they take the next steps. “In the future, we want to keep moving forward and have strong programs with clear outcomes to address the various pipeline, retention and advancement issues,” Saint Juste said. “We want to build excitement among young Black students for the field of accounting and evolve the profession to where they, too, can see themselves excelling and having a place in leadership.” The Black CPA Centennial is a yearlong effort to honor, celebrate and build upon the progress Black CPAs have made in shaping the accounting profession. The celebration is a collaborative effort of the AICPA, Diverse Organization of Firms, Illinois CPA Society, National Association of Black Accountants and National Society of Black CPAs. Anita Dennis is a freelance writer based in New Jersey. To read more stories from and about Black CPAs, visit www.blackcpacentennial.cpa.

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September | October 2021

kudos

Joshua J. Boyle

Dan Fabich

Kristen Glatzel

Robert Grey

Adam Henning

Matt Langer

Matt Lorenz

Larry Alsum, CPA, president and CEO of Alsum Farms & Produce Inc., was named Grower of the Month and featured in the August 2021 issue of Potato Growers magazine.

Robert Grey, AM, an accredited member of the American Society of Appraisers, has been promoted to senior valuation analyst with Vrakas Business Valuations Inc., Brookfield.

Thuy Barron, CPA, managing director of Deloitte Tax LLP, was appointed by Gov. Tony Earl to the Wisconsin Accounting Examining Board. Her term will run from July 13, 2021, to July 1, 2025. She succeeds Gerald E. Denor, CPA.

Adam Guernsey, CPA, a member of RitzHolman CPAs’ tax team, has been promoted to supervisor.

Christy Berger, CPA, general manager and executive vice president of Nelson Communications Cooperative, Durand, was inducted into the Wisconsin State Telecommunications Hall of Fame at the organization’s annual convention in May. Joshua J. Boyle, CPA, has been promoted to partner at Wipfli LLP, Wausau. He specializes in providing audit, accounting and consulting services to clients in the health care industry. Shawn Carney, CPA, was named the new CEO of Catholic Charities of Madison. Curtis Day, CPA, president and owner of Wausau Tax & Accounting, and Doug Gross, CPA, MBA, CGMA, partner at MBE CPAs, were interviewed by WKOW 27–Wausau for a feature about the child tax credit. Kathy Drengler, CPA, has joined the Community Foundation of North Central Wisconsin’s board of directors. She recently retired as VP of Greenheck Fan Corp. Dan Fabich, CPA, has been promoted to partner in the audit and accounting practice at Wipfli LLP, Green Bay. He focuses on the manufacturing and distribution and service industries. Kristen Glatzel, CPA, a member of RitzHolman CPAs’ nonprofit team, has been promoted to supervisor. Brenda Graat, CPA, MBA, has been admitted as a new partner at Baker Tilly US LLP. She specializes in real estate and construction in the Milwaukee office.

Adam Guernsey

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September | October 2021

Adam Henning, CPA, MPA, formerly a manager with Vrakas S.C., Brookfield, has been promoted to principal in the firm’s small business accounting department. He has been with Vrakas since 2017. Paul Hoesly, CPA, CFO of Potawatomi Business Development Corp., was promoted to the additional role of chief strategic officer. Matt Langer, a member of RitzHolman CPAs’ nonprofit team, has been promoted to senior accountant. Arthur Lee, CPA, owner of Alliance Tax & Accounting, has joined the Waukesha County Business Alliance board of directors. Joe Liethen, CPA, was promoted to senior vice president of finance and accounting for Marine Credit Union. He joined the credit union in June 2020 as VP of accounting and had previously been VP of store finance at Kohl’s Department Stores. Matt Lorenz, CPA, a member of RitzHolman CPAs’ tax team, has been promoted to supervisor. Katelynn Lorenzi, CPA, formerly an associate with Vrakas S.C., Brookfield, has been promoted to manager in the firm’s tax department. She interned at the firm in 2016 and joined the professional staff after graduating from UW–Whitewater in 2017. Tom Mahoney, CPA, has joined Wintrust Commercial Banking as Kenosha market president at its State Bank of The Lakes locations in Kenosha. Jay McKenna, CPA, president of North Shore Bank, was appointed to the Office of Comptroller of the Currency Mutual Savings Association Advisory Committee. McKenna joins only nine other finance leaders from across the nation as a member of this industry-crucial committee.

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Katelynn Lorenzi

Randall Miller

Sara Paull

Mike Schafer

Mike Meckstroth, CPA, CGMA, has been appointed to assurance partner at Cohen & Co., Milwaukee. Randall Miller, CPA, a partner at Hawkins Ash CPAs, has accepted a two-year appointment as chairperson for the Peer Review Alliance, the administering entity for the AICPA peer review program. David Minch, CPA, has joined KerberRose’s audit team as a senior manager and is based in the firm’s Appleton office. Kelly Mischler, CPA, has joined Hoffman Planning, Design & Construction Inc. as director of accounting. Sara Paull, CPA, a member of RitzHolman CPAs’ nonprofit team, has been promoted to supervisor. Daniel Pichler, CPA, a retired Wipfli partner who in May 2020 left the firm after nearly 40 years, in June received the 2021 Distinguished Achievement Award in Business from St. Norbert College. He is a 1983 graduate of St. Norbert. Mike Schafer, CPA, a member of RitzHolman CPAs’ tax team, has been promoted to supervisor. Craig S. Schessler, CPA, has been promoted to partner in the tax practice at Wipfli LLP, Wausau, where he focuses on manufacturing and distribution clients. Allison Schultz, a member of RitzHolman CPAs’ tax team, has been promoted to senior accountant. Abijeet Singh, a member of RitzHolman CPAs’ tax team, has been promoted to senior accountant. Mark Umhoeffer, CPA, has been promoted to CFO at Bradley Corp., Menomonee Falls. He had been vice president of finance since 2009.

Craig S. Schessler

Allison Schultz

Abijeet Singh

Denise VandenbushKohlmann

Denise Vandenbush-Kohlmann, CPA, MST, financial projects manager for the City of Waukesha, published an article in the July issue of The Municipality, the official publication of the League of Wisconsin Municipalities.

ORGANIZATION NEWS Deloitte has established Making Accounting Diverse and Equitable (MADE), a commitment to generate more advisory, auditing and tax career opportunities and leadership pathways for the next generation of CPAs. The initiative represents a bold vision for the accounting profession, in terms of increasing racial and ethnic diversity as well as helping students of color see and realize their future in business through the prism and possibilities of accounting. MADE combines both financial support and deep resources to attract diverse individuals into the accounting field and support them as they chart their pathway from high school to business professional to leadership in the profession. Sikich LLP announced in mid-2020 that employees could work remotely indefinitely, and to support the company’s new flexible work model, the firm will move into a new, modern, high-tech office at The Corridor in Brookfield. The new space is slated to open by the third quarter of 2022. Vrakas CPAs + Advisors, Brookfield, has been named a Top Workplace of Southeastern Wisconsin by the Milwaukee Journal Sentinel for the second consecutive year.

Want your new job, promotion or award mentioned in Kudos? H Email your announcement and photo in JPG format to mtzinzow@icloud.com. H

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September | October 2021

{ Taxation | Cryptocurrency }

How the IRS is dealing with this virtual conundrum

hen Bitcoin started in 2009, a single “coin” was nearly worthless. It subsequently reached parity with the U.S. dollar and rose to a high near $20,000 in 2017 before plummeting again. In 2020, to stave off economic disaster due to the pandemic, By Robert B. governments around the world Teuber, JD poured money into their economies, creating potential financial insecurity in the value of their currencies. Amidst that uncertainty, investors turned to virtual currencies. By October 2020, the value of a single Bitcoin had again risen to over $16,000, and it peaked five months later at nearly $60,000 before settling in the mid-$40,000s in late summer 2021. While the long-term viability of cryptocurrencies is up for debate, it is clear that they have become mainstream. Bitcoin, Ethereum, Litecoin, Dogecoin and others all are working to

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claim their place in the market. Many legitimate investors now view the currencies as a diversifying part of their portfolios, and many major corporations accept Bitcoin as payment. The IRS has had their eye on the use of virtual currencies for some time, but with the increased popularity comes greater scrutiny.

What is a cryptocurrency? The terms “digital currency,” “virtual currency” and “cryptocurrency” are often used interchangeably. However, technically they are not the same thing. Digital currency describes any electronic currency and includes virtual currencies and cryptocurrencies. The existing IRS guidance speaks in terms of virtual currencies and defines the term as “a digital representation of value that functions as a medium of exchange, a unit of account, and/or a store of value.” The IRS is clear in distinguishing virtual currencies from “real currency.” A cryptocurrency is a type of virtual currency that uses algorithms and cryptography to validate and secure transactions that are digitally recorded on a blockchain ledger. Because of the secrecy provided by the cryptography, the government is committing substantial resources to tracking and identifying transactions and owners.

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Why the IRS is interested in virtual currencies The government’s interest in virtual currencies stems from the combination of the secrecy and security associated with cryptocurrencies. The blockchain ledger system used to keep track of the currencies provides security and near anonymity regarding ownership. These features make the use of cryptocurrencies appealing to bad actors dealing in illicit behavior such as drugs, terrorism, human trafficking, extortion and tax evasion. Yet most who deal in cryptocurrencies do not have such nefarious designs in mind. Hundreds of virtual currency exchanges now exist that can be used to buy, sell and trade the cryptocurrencies. But even legitimate transactions can be hard for the government to track. In 2016 the IRS issued “John Doe” summonses to the Coinbase cryptocurrency exchange and obtained information on transactions involving $20,000 or more. In the wake of this effort, the IRS issued a series of notices to the unmasked taxpayers, encouraging them to become compliant by amending prior-year returns. The IRS has continued the John Doe effort with other cryptocurrency exchanges. The IRS’s dedication to the cryptocurrency issue is demonstrated by adding to the 2020 Form 1040 this question: “Did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?” The question appears front and center near the beginning of the return and is hard to miss. If a taxpayer answers the yes or no question incorrectly, the IRS will likely view the return as intentionally false.

How are virtual currencies taxed? The limited IRS guidance (Notice 2014-211 and Revenue Ruling 2019-242) provides that virtual currency transactions are treated as transactions in property. As property, a transaction will trigger a gain or loss that is measured against the basis of the asset. Longstanding principles concerning the taxation of property should be consulted when working with taxpayers dealing in virtual currencies. But not all principles should be taken for granted, as was recently shown in an IRS Chief Counsel Memorandum, which appears to deny like-kind exchange treatment to pre-Tax Cuts and Jobs Act transactions.3 Virtual currencies can be used as payment for goods and services, be traded for other currencies and paid to an employee or contractor as compensation. Purchased cryptocurrency: The basis of purchased virtual currency is equal to the amount spent to acquire the currency plus fees, commissions or other acquisition costs.

“

The IRS has had their eye on the use of virtual currencies for some time, but with the increased popularity comes greater scrutiny. Cryptocurrency received as payment: When a virtual currency is received as a payment for goods and services, the fair market value of the currency on the date received must be included in the recipient’s gross income. If the currency is traded on an exchange, reference can be made to the established exchange rate to determine the fair market value and establish basis. Cryptocurrency used to make payment: If cryptocurrency is used to make a payment, the transaction will typically be treated as an exchange of a capital asset and trigger a capital gain or loss. Holding periods and short- or long-term gain or loss are determined under traditional concepts. The gain or loss will be measured as the difference between the fair market value of the goods or services received and the adjusted basis of the cryptocurrency. Where the currency is held as inventory (as in the case of a cryptocurrency miner holding the currency for sale), the sale proceeds constitute ordinary income. In an arm’s-length transaction, the basis of goods received equals the fair market value of the property at the time. Cryptocurrency as compensation: When cryptocurrency is received as compensation, the fair market value of the currency at the time is included in the gross income of the

1 Notice 2014-21, 2014-16 IRB 938, 3/25/2014.

2 Rev. Rul. 2019-24, 2019-44 IRB 1004, 10/09/2019. 3 Chief Counsel Advice 202124008, 6/18/2021.

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{ Taxation | Cryptocurrency }

recipient. If received in the conduct of a trade or business, the payment will be included in gross receipts, and the net earnings from self-employment will be subject to both income and self-employment tax. If the cryptocurrency is paid to an employee, the payment is subject to income and employment tax withholding. Compensatory payments must be reported on Forms 1099 or W-2 as appropriate. Special circumstances: In addition to Notice 2014-21 and Revenue Ruling 2019-24, the IRS website includes a series of virtual currency Frequently Asked Questions4 addressing a series of special circumstances including “airdrops” and hard and soft “forks” through which those active in cryptocurrencies may receive additional currencies. Because of the potential volatility in cryptocurrency values, the timing at which cryptocurrency in an “air-drop” is received could be significant. The FAQs discuss this timing question and other circumstances, such as gifts, donations and how to identify the specific cryptocurrency units sold in a transaction.

The future At this time, there remains limited guidance on the taxation of cryptocurrencies. Given the presence of cryptocurrencies in the news, it is likely only a matter of time before new legislation targeting cryptocurrencies is enacted. Reporting requirements by exchanges appears likely. Until then, it is best that tax professionals ask their clients about any virtual currency holdings and the nature of any transactions involving the currencies. It is also essential that we impress upon our clients the need to maintain records concerning the acquisition and disposition of all virtual currencies and the fair market value of the currency or property involved at the time of any transactions. Robert B. Teuber, JD, is a shareholder at von Briesen & Roper s.c. His practice focuses on resolving federal and state tax audits, appeals and collection matters. Contact him at 414-270-2538 or rteuber@vonbriesen.com.

4 https://www.irs.gov/individuals/international-taxpayers/frequently-asked-

questions-on-virtual-currency-transactions

ATTENTION! THE CURRENT CPE REPORTING PERIOD ENDS DEC. 31, 2021 Reporting Period: Jan. 1, 2020 – Dec. 31, 2021 CPE Requirement: 80 total CPE credits Ethics Requirement: 3 Ethics CPE credits

Visit wicpa.org/CPErequirements for more information about CPE requirements.

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September | October 2021

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YOUR TRUSTED TAX SOLUTION The Tax Section of von Briesen & Roper, s.c. is your resource for tax situations ranging from the traditional to the most complex including: State and Federal Voluntary Disclosures, FBAR/Foreign Issues and State Tax Nexus Studies. Our knowledge and experience have positioned us to be your trusted solution on unique tax matters. The bottom line? We get results. To learn more about our Tax Section, please contact Robert Mathers at rmathers@vonbriesen.com.

vonbriesen.com/tax wicpa.org

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September | October 2021

Milwaukee • Madison • Neenah • Waukesha • Green Bay • Chicago • Eau Claire

{ Human Resources | Mental health }

IN AN UNCERTAIN ENVIRONMENT 32

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What can organizations do to help their employees?

G By Carver Smith, CPA

iven the continued uncertainty surrounding COVID and its impact on returning to the office vs. working remotely, employers will need to address a lengthy list of issues to ensure a safe and welcoming work environment.

Most of the issues will likely be visible, tangible problems that require relatively simple solutions. After all, our society has become so accustomed to masks, hand sanitizer and social distancing that at this point everyone generally knows how to foster a safe working environment, at least as far as those concepts are concerned. But what about mental health? That problem, obviously, is neither visible nor tangible. And the solution is anything but simple. However, there are certain steps that employers can take to help their team members minimize stress at the workplace (and in their lives generally). Being in the search and staffing business, we learn a lot about individuals’ career concerns and, specifically, their anxieties about returning to the workplace. We also have seen the steps that organizations are taking to address those concerns. Here are some suggestions, tips and best practices for your consideration. And please remember that you (and I, for that matter) are most likely not a mental health expert. But we can be conscious, empathetic and aware of what to look for — and how to mitigate the mental health burden that many of our employees carry each and every day. With that in mind, here are some steps your organization should be taking:

1. Understand mental health and how it impacts your employees. For any organization, the first step in addressing mental health is understanding what mental health means and how prevalent mental health issues are. Mental health encompasses psychological, emotional and social well-being. It is tied directly to people’s stress levels, decision-making, relationships and health. From a company’s vantage point, mental health issues

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could be anywhere you look. Your CEO is just as likely as your intern to struggle with mental health issues. Particularly in our uncertain world, companies need to realize that most people have had their lives turned upside-down over the past year, resulting in significant life changes, health issues, economic struggles and professional pressure. All of these can be components to mental health struggles, and it isn’t hard to see why. Part of understanding issues with mental health is knowing what to look for. Do you have employees who often call in sick or take a lot of time off ? Do they appear irritable, frustrated, moody or anxious? Sometimes a lack of productivity or a withdrawal from social situations can indicate a larger mental health issue. Of course, mental health issues often lie beneath the surface, so they can be tough to recognize. Knowing the warning signs and understanding how to handle mental health with care and empathy is half the battle.

2. Offer mental health coverage. Employers are beginning to realize that investing in their employees’ mental health can deliver benefits that far outweigh the costs. With more than 40 million Americans receiving mental health treatment or counseling each year, employers can display a level of care and empathy by offering mental health benefits as part of their standard health care package. One day, mental health benefits may be as standard as vision and dental offerings. Ultimately, having a larger and more supportive outlet for dealing with mental health issues will benefit people (and their employers) in the short term and the long run.

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{ Human Resources | Mental health }

“

If you establish an environment of trust and ask your employees what factors comprise their well-being, they will tell you what is most important to them. And the organization should listen closely — because ultimately their well-being is your well-being.

One of the most important services that a company can offer its employees is an EAP, or an Employee Assistance Program. An EAP helps team members with any personal problems that may impact their work life, job performance or overall well-being. EAPs offer third-party, confidential, expert issue resolution and a level of comfort in a cost-effective manner to assist employees with everything from stress and depression to grief, trauma, substance abuse and work-related issues — and they are as popular now as they’ve ever been for good reason.

3. Communicate, communicate, communicate! When there is a lack of communication in virtually any situation, people tell themselves stories to fill the silence. Often those stories are negative thoughts based on past experiences and biases. These are the tricks that our brains play on us. So to avoid these situations, you can help protect the mental health of your employees by communicating regularly and giving consistent feedback. In essence, this lets your employees focus on facts, so to speak, instead of letting them go down a rabbit hole of negative thoughts and self-doubt. Corporate communication has been particularly important since the beginning of the pandemic, as many companies have undergone layoffs, furloughs, salary deferrals and other cost-cutting measures to help stay afloat during a challenging economic time. For many employees, the natural reaction to these rumors and realizations has been to worry about their own job security. (And, in some cases, those fears have come to fruition.) But by communicating candidly with team members and managing expectations in a fair manner, you can help keep your employees’ focus on the tasks at hand while continuing to build trust.

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4. Recognize the need for new flexibility. Flexibility at work is important, perhaps now more than ever. In the search business, we constantly hear that most people want to work from home at least some of the time. After an exhausting year, forcing employees back to the office full time likely will have a negative impact on their mental health, if not their loyalty. So ask yourself, can you compromise in the interest of flexibility? Can you still achieve your desired results and the desired company culture by using a flexible work schedule? In an ideal world, people would separate their personal and family issues from their work life. But this obviously is not an ideal world, and employers need to understand that well-being is a complicated issue that does not simply get pushed aside from 9 to 5 every day. Much like other major events throughout history, the pandemic has changed many things permanently. But the impact on expectations, demands and ultimately mental health is still evolving. Being aware and proactive and knowing where your abilities begin and end on this important topic is vital. If you establish an environment of trust and ask your employees what factors comprise their wellbeing, they will tell you what is most important to them. And the organization should listen closely — because ultimately their well-being is your well-being.

Carver Smith, CPA, is a partner with Baker Tilly US LLP and leads the firm’s staffing, recruiting and executive search business, Baker Tilly Search & Staffing, in Milwaukee. Contact him at 414-777-5322 or carver.smith@bakertilly.com.

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It shouldn’t take a storm of immense proportions to find out who you can count on.

BUT SOMETIMES IT DOES. And that’s the Silver Lining®.

To find out more about the Silver Lining and a special discount on home and auto insurance just for members of the WICPA, contact this official supplier of the Silver Lining. Professional Insurance Programs at (414) 277-0154 or info@profinsprog.com Or to find an agency near you, visit thesilverlining.com.

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On Balance

September | October 2021

{ Accounting & Auditing | Nonprofit accounting }

COVID-19 and Nonprofits Big changes — and big differences between grant- and contribution-funded organizations

N By Denes Tobie, CPA

umerous factors (both internal and external) can affect the success of nonprofits’ fundraising and recruitment efforts, but the effects of the COVID-19 pandemic on these organizations — as in nearly every sector and industry — have often been more far-reaching than anything we’ve seen before.

In a recent Wipfli LLP survey of nonprofits , three primary concerns emerged: employee burnout, fundraising and recruitment. As nonprofits navigated the early months of the pandemic, many found themselves facing the challenge of keeping staff and volunteers safe as they provided essential services. Fundraising naturally became a challenge, as communities faced a unique level of need. Yet these effects were not felt equally across nonprofits. Grant-funded clients (GFP) for the most part remained open throughout 2020. Many received stimulus funding — sometimes in the millions of dollars. For those groups, careful documentation of how they are spending this money will be a top concern. This is especially true for those who have not yet (or only recently) received the funds and now must determine how to spend that money while staying within the confines of the grants’ parameters. These GFP organizations were able to continue serving their communities, thanks in large part to that funding. Their core staff continued working to provide essential services — many times in response to exacerbated community need. These workers might now be facing increased burnout.

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In contrast, many community-based nonprofits, most of whom are contribution funded, were required to close their doors for indefinite periods. Their primary means of fundraising — local in-person events — was shuttered. For these organizations, the pandemic made it impossible to conduct business as usual for staff and visitors as well as those they served. One silver lining was the unexpected success of virtual fundraising drives, many of which exceeded previous years’ efforts. Any community-based groups that received pandemic funding will also need to focus on staying on the right side of any regulatory demands — which might be an even bigger challenge for organizations unused to managing the ins and outs of government funding. For almost all nonprofits, the pandemic magnified — albeit in different ways — internal challenges and opportunities for improvement. The need to conduct virtual fundraising events,

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to enable remote work for nonessential services, to deploy safety measures for volunteers who continued to work in person, to stay connected with colleagues and to implement electronic or digital functionality in their time-keeping all exposed the importance of technology for efficient and effective operations. As a result, a common need this year for many nonprofits is likely to be more robust and digitally ready financial software. Many organizations — especially communitybased nonprofits — found that their current solutions simply weren’t sufficient for remote work. These systems lacked appropriate internal controls, which were vital as staff attempted to conduct work remotely. Time-keeping also became a pain point for nonprofits that didn’t have electronic solutions in place. Some organizations didn’t have sufficient equipment, such as laptops, to support a remote workforce. Another area of impact was internal control systems. Many nonprofits took a conservative approach, requiring multiple signatures to approve invoices or sign checks. Without staff centered in the same physical location, these processes required an update. While painful in the moment, these updates are likely to result in greater efficiency and flexibility for these organizations going forward. Nonprofits would be well-advised to devote time to documenting these new procedures and developing standard procedures for using them going forward. For nonprofits who found themselves needing to update technologically, another focus this year will likely be on evaluating those changes for long-term appropriateness. In the rush to implement products and services for specific and urgent needs, many will benefit from taking a second look at how best to train staff on correct usage. Some systems or software might also have additional functionality or optimization features that could provide additional advantages for nonprofits. With the current rate of retirements, and through all the changes impacting the current work environment, nonprofits will need to continue to address engagement in the workplace. As painful as the past 18 months have been, the pandemic necessitated changes across the nonprofit sector that are likely to have a positive impact going forward. Many organizations were pushed, albeit under high stress, to make changes that were in fact quite necessary and that will help them to operate more effectively in the long run. Others were inspired to find new ways of engaging donors and serving their clients. And some were prompted to make

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“

As painful as the past 18 months have been, the pandemic necessitated changes across the nonprofit sector that are likely to have a positive impact going forward. difficult programming decisions that might lead to greater efficiency and more targeted community support. Our job as their trusted advisers is to continue listening to our nonprofit clients, help them make the most of these opportunities and prepare for the new future as we emerge from this hectic time. Denes Tobie, CPA, is a partner with Wipfli LLP. She serves nonprofits and government agencies, specializing in audits, nonprofit consulting, training and regulatory compliance. Contact her at 608-270-2929 or dtobie@wipfli.com.

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{ Member Benefits | Volunteer opportunities }

VOLUNTEER OPPORTUNITY HIGHLIGHTS Joining a WICPA committee or serving on a board is a great way to network with like-minded individuals, sharpen communication abilities, gain leadership skills, form business relationships and friendships and strengthen your brand. They are also ways to “give back” to the profession that has given you so much. Sharing talent as a volunteer enhances the CPA profession while helping others achieve ambitious goals.

The WICPA board of directors, the Educational Foundation board of directors and the Ethics Committee, all highlighted here, are currently accepting volunteers. To be considered for the WICPA board of directors or the Educational board of directors, to join the Ethics Committee or to find out more about any other volunteer opportunities, contact Tammy Hofstede, WICPA president & CEO, at tammy@wicpa.org or 262-785-0445, ext. 4518. WICPA BOARD OF DIRECTORS

The WICPA Board of Directors provides strategic governance in accordance with the WICPA strategic plan, mission and vision. The board ensures the WICPA serves the diverse needs of members, enhances professional competency, promotes the value of members and the profession, advocates on behalf of the profession and builds community among members. Chair Angela C. Thomas, Expenditure & Revenue Accounting Section Chief, Wisconsin Department of Natural Resources

Directors Jeff Dewane, Assistant Controller, Vinton Construction Company

Chair Elect Steven Pullara, Tax Partner, BDO USA LLP

Ruth Kallio-Mielke, Managing Director, Deloitte & Touche LLP

Past Chair Wendi Unger, Partner, Baker Tilly LLP Secretary/Treasurer Lucien Beaudry, Equity Shareholder, Reinhart Boerner Van Deuren s.c.

ETHICS COMMITTEE

Stacy Stinson, Assistant Professor of Accounting, Concordia University AICPA Council Ryan Hanson

Members Wayne Ehlert, Partner, Baker Tilly LLP

Carrie Gindt, Partner, Reilly, Penner & Benton, LLP Barbara Pippenger, Senior Accountant, Gordon J. Maier & Company LLP

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September | October 2021

— Angela C. Thomas, Board Chair

Neil Keller, Partner-in-Charge, Tax Services, Sikich LLP

Chair Barry Sattell

Terry Strittmater, Principal, CLA

Your involvement in the WICPA can positively help shape the professional that you become. You will not find relevance by only paying the membership dues, so take an active role in building social capital for yourself and your business. Serving on the WICPA board of directors is an excellent way to do this — and it provides you the opportunity to learn about and help govern your professional organization.

Kyle Stephens, VP of Finance and Administration, Craft Beverage Warehouse LLC

The Ethics Committee oversees the effective regulation and enforcement of the AICPA Code of Professional Conduct.

John Knepel

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John Heindel, Business Partner, Lauber Business Partners

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Our committee receives cases from the AICPA Professional Ethics Executive Committee (PEEC) after a detailed investigation by the Joint Ethics Enforcement Program ( JEEP). We review the findings and the responses from the CPA or CPA firm in question and either concur or nonconcur with the recommended remedial actions to be taken. In some ways, our contribution is a bit of detective work, knowledge of the Rules of Professional Conduct as set forth and a desire to bring honor and satisfaction to our hard work as CPAs. If you play by the rules and aren’t afraid of making tough decisions, our committee is for you. — Barry Sattell, Committee Chair

wicpa.org

WICPA EDUCATIONAL FOUNDATION BOARD OF DIRECTORS

The WICPA Educational Foundation plays a pivotal role in supporting programs to improve awareness and perceptions by educating students and educators about the exciting opportunities available to accounting professionals. Chair Paul Frantz, Baker Tilly LLP

Jessica Horning, Financial Reporting Manager, Medical College of Wisconsin

Secretary Roberta Ward

Directors Mark Bichler, Business Education Teacher, Port Washington High School

Jon Gaines, VP Business Services and Finance, Wisconsin Women’s Business Initiative Corp. Jessica Gatzke, Shareholder, Scribner, Cohen and Company S.C.

Kale Post, Manager, Dwayne Johnson & Associates Wendy Potratz, Senior Lecturer, University of Wisconsin–Oshkosh Bret Priaulx, Senior Manager, Deloitte & Touche LLP

Jose Saenz, Director, Advancement Gift Services, Marquette University

Board Liaison Lucien Beaudry, Equity Shareholder, Reinhart Boerner Van Deuren s.c.

“

The Educational Foundation board has given me a platform to engage with the future leaders of our profession and provided me with the opportunity to share my professional journey while helping to shape those coming behind. The conversations have been rewarding on many fronts. — Paul Frantz, Educational Foundation Board Chair

Join the WICPA Board of Directors! The WICPA is seeking members to serve on its board of directors. Opportunities include: • Staying up to date on professional issues

• Providing strategic • Acquiring new governance in accordance leadership and with the WICPA strategic plan, training skills mission and vision

Applicants must be WICPA CPA members in good standing. A “CPA member” is defined as a WICPA member who has obtained a certificate as a CPA from the Accounting Examining Board of the State of Wisconsin, or from a similar legally constituted authority in any other state, possession or territory of the United States or the District of Columbia.

wicpa.org

To apply, visit wicpa.org/BoardApplication through Nov. 15, 2021. Questions? Contact tammy@wicpa.org.

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September | October 2021

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See what other CPAs say about CAMICO. Visit www.camico.com/testimonials

Accountants Professional Liability Insurance may be underwritten by CAMICO Mutual Insurance Company or through CAMICO Insurance Services by one or more insurance company subsidiaries of W. R. Berkley Corporation. Not all products and services are available in every jurisdiction, and the precise coverage afforded by any insurer is subject to the actual terms and conditions of the policies as issued. ©CAMICO Services, Inc., dba CAMICO Insurance Services. All Rights Reserved. 40

On Balance

September | October 2021

Harris Hauptman Senior Account Executive T: 800.652.1772 Ext. 6727 E: hhauptman@camico.com W: www.camico.com wicpa.org

2022 WICPA

NOMINATE SOMEONE YOU KNOW FOR AN EXCELLENCE AWARD! H Accounting Educator H Community Service H Accounting Student H Distinguished Career H Business & Management H Diversity & Inclusion H CPA in Public Practice H Woman to Watch H Young Professional Submit your nomination at wicpa.org/awards by Nov. 10, 2021. Recipients will be announced in January and honored at the Member Recognition Banquet & Annual Business Meeting on May 5, 2022.

PRSRT STD U.S. POSTAGE

The Magazine for Wisconsin CPAs

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Milwaukee, WI Permit No. 5845

Wisconsin Institute of Certified Public Accountants W233N2080 Ridgeview Parkway, Suite 201 Waukesha, WI 53188

On Balance Magazine - Sept/Oct 2021

Articles inside

ACCOUNTING & AUDITING

TAXATION

HUMAN RESOURCES

THE PROFESSION

The enhanced ERC

Surviving the ransomware siege

Making sense of sliding statistics

Certified unconventional

Vol. 17 No