Financial Fortress Builders
Features Columns
6 Servant solution seeker — Dale Kooyenga, CPA, MBA
Dale Kooyenga’s diverse background in public accounting, the military and politics creates an intriguing amalgam that has uniquely prepared him for his newest role as president of the Metropolitan Milwaukee Association of Commerce.
By Sharon Zalewski
12 Sunrise, sunset
A look at the provisions that may make up a new tax bill this year, including TCJA and campaign proposals.
By James D. Brandenburg,
CPA, MST
16 Navigating the path to audit and attest quality management
Four new standards will soon require firms to take a risk-based and scalable approach to designing, implementing and operating a system of quality management.
By Andrea Wright, CPA and Melanie Barthel, CPA, CPCU
20 Leveraging AI in forensic accounting and litigation support
It’s critical for CPAs to understand the seismic shift artificial intelligence (AI) is causing in the field of forensic accounting and litigation support.
By Christine Fabbro Brunner, CPA, CFE, MAcc
24 STATE TAXATION
Fraud prevention 101: Protecting your personal data
The Wisconsin DOR is committed to leveraging advanced data security technologies and processes to ensure taxpayer information is safe and secure.
By Justin Shemanski
28 EMPLOYEE BENEFITS
Retirement plan forfeitures under the spotlight
An IRS rule change and a surge in ERISA litigation have prompted plan sponsors to reevaluate how they handle forfeiture balances.
By
Joseph Topp, CPA
32 FEDERAL TAXATION
Cost segregation industry update
Significant tax law modifications have impacted the cost segregation industry over the last few years.
By
Mark Vorkapich, ASA
36 BUSINESS DEVELOPMENT
Business development to the letter
Knowing the difference between “suspects” and “prospects” will help you maximize your business development efforts.
By Timothy Allen, MBA, PAFM
& CEO’s
Memorials | departed members
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 2025 On Balance
2024-2025 WICPA
Chair
Ryan J. Hanson, CPA, CGMA
Chair-elect
Stacy A. Stinson, CPA, MBA
Past Chair
Matthew J. Schaefer, CPA, CGMA
Secretary/Treasurer
Lucien A. Beaudry, CPA, JD
Directors
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AICPA Council
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“Together, we can amplify our collective impact and make strides that would be impossible alone.”
New Year, New Horizons
By Ryan J. Hanson, CPA, CGMA
As the calendar has turned and a new year dawns, it’s a perfect moment for reflection and reinvention. This is a time not only to look back on your achievements in 2024 but also to envision the possibilities ahead in 2025.
The year of 2024 was filled with opportunities, and as CPAs, you rose to the occasion. Whether you were guiding businesses through complex economic conditions, helping individuals navigate their financial futures or advancing ethical standards in the profession, your work has been essential to the prosperity of our communities and profession. Your commitment to excellence, integrity and service inspires trust and stability in an ever-changing world. As WICPA members, you’ve also contributed to a vibrant professional community that fosters collaboration, innovation and lifelong learning. These are accomplishments worth celebrating.
The accounting profession is evolving rapidly, and 2025 promises to bring even more opportunities and challenges. Emerging technologies like AI are transforming the way we approach auditing, tax preparation and financial analysis. Meanwhile, the rising emphasis on the CPA pipeline will continue to be a focus in 2025. Let’s embrace these trends not as challenges but as opportunities to expand our skill sets and redefine our roles while shaping the future of the CPA profession. As trusted advisors, we have the chance to deepen our impact and deliver greater value to our clients, employers and communities.
In the year ahead, let us prioritize connection. Strengthen your relationships within the WICPA network, where mentorship, collaboration and shared wisdom are invaluable. Attend events, join committees and participate in initiatives that align with your passions and career goals. Together, we can amplify our collective impact and make strides that would be impossible alone.
The new year is also a call to invest in your personal and professional growth. Consider the areas in which you want to improve or excel — whether it’s earning a new certification, attending a professional development seminar or refining your work-life balance. In this pursuit, set clear, actionable goals, and remember, every step forward — no matter how small — is progress.
As we embark on 2025, let’s carry forward a sense of optimism and purpose. The work you do as CPAs is foundational to the success of businesses, the security of individuals and the trust in our financial systems. By staying true to our values and embracing change, we can continue to build a profession that thrives in the face of uncertainty and creates a lasting impact.
Here’s to a year of growth, achievement and making a difference. Happy new year! May 2025 be your most rewarding year yet!
Ryan J. Hanson, CPA, CGMA, is senior vice president and chief financial officer for Pekin Insurance and the WICPA 2024–2025 board of directors chair. Contact him at 309-478-2746 or rjhanson@pekininsurance.com.
“The
new pathways, paired with strengthened interstate mobility, are critically important solutions to ensure employers and users of CPA services continue to have access to top talent now and in the future.”
The Path Forward
By Tammy J. Hofstede
For the past few years, there has been much debate about the number of hours of education that should be required for licensure. We have been listening and learning from our members and collaborating with other state partners regarding the outdated policies that currently govern CPA licensing in our state.
Protecting the Wisconsin business community, advancing the CPA profession and creating a strong, stable talent pipeline are continued priorities for the profession and our members. The WICPA board of directors, driven by the commitment to protect the integrity and impact of the CPA profession, unanimously voted to actively pursue essential legislative changes affecting interstate mobility and alternate educational pathways to licensure. In this effort, we are joining dozens of other states currently working on legislative reform.
In a time of CPA shortages and a shrinking pipeline of future CPAs, we must ensure the future of the profession and our mission to provide Wisconsin businesses, government and nonprofit entities access to the expertise they need. This includes CPAs who are licensed in other states.
Pathways to CPA licensure
The two paths state CPA societies are proposing for licensure include the following options:
1. A bachelor’s degree with a concentration in accounting, passing the CPA Exam, and two years of experience
2. A master’s degree with a concentration in accounting, passing the CPA Exam, and one year of experience
We are removing the reference to 150 and 120 credits to future-proof legislation, due to some states already piloting
90-credit bachelor degrees. In addition, we will also be reviewing the current statutes and rules regarding CPA Exam requirements and licensure. Our review will include the following topics:
• accepting foreign college credits
• how technical college credits not transferred to a four-year college can still apply to education requirements
• required classes to sit for the CPA Exam
• the amount of CPE required to change from an inactive to active license status
• the ability to sit for the CPA Exam prior to graduation
Removing barriers to working in Wisconsin
We believe that interstate mobility should be clear about whether a CPA licensed in another state, who is in good
standing in their home state and who meets professional standards, should be able to respond to the professional requests of Wisconsin clients. Automatic mobility, as Wisconsin will also propose, strengthens interstate mobility by ensuring national third-party interests cannot deny Wisconsin businesses access to qualified accounting experts, regardless of which state they primarily work in.
We are not alone. More than 20 other states — representing nearly 75% of all U.S. CPA license holders — have indicated they are also pursuing automatic mobility. Four states already have it.
The new pathways, paired with strengthened interstate mobility, are critically important solutions to ensure employers and users of CPA services continue to have access to top talent now and in the future.
We are continuing to engage in conversation with firms, members, influential leaders, the Accounting Examining Board, legislators, CPA state societies and national accounting organizations. We encourage and welcome your comments and will keep you informed as we progress.
THURSDAY, MARCH 20 BROOKFIELD CONFERENCE CENTER & WICPA CPE LIVESTREAM
Tammy J. Hofstede is president & CEO of the WICPA. Contact her at 262-785-0445 ext. 4518 or tammy@wicpa.org.
ACCOUNTING SCHOLARSHIPS
Servant Solution Seeker — Dale Kooyenga, CPA, MBA
Photography by
John Sibilski
Dale
Kooyenga’s unusual career path, rooted in service, could lead to uncommon results for Milwaukee’s business community.
By Sharon Zalewski
Dale Kooyenga, CPA, MBA, likes a good Venn diagram.
President of the Metropolitan Milwaukee Association of Commerce (MACC) since January 2024, the 45-year-old’s servant leadership and diverse background in public accounting, the military and politics create an intriguing amalgam. He believes this mix has uniquely prepared him to represent the region’s businesses, make connections that bear fruit, and find solutions that move the region forward.
His path to the MMAC has been paved by a series of overlapping circles.
“I always thought that being a CPA was part of my journey,” Kooyenga said, “but not something I wanted to do long-term.” Indeed, in addition to a decades-long stint in public accounting, he has served as an officer in the armed forces; consulted startup and early-stage companies; was elected to public office; and now works to improve the economic vitality of metro Milwaukee’s business community — all careers he has pursued successfully with an accounting background and a “four-legged stool.”
“It’s up to each of us to figure out our role in this confusing, crazy world,” he said. To do so, one must be spiritually, physically, socially and academically grounded. “These are the four parts that make for a rooted citizen, and I firmly believe in hitting all four of those fronts daily.”
The circle of (professional) life
Some accounting professionals’ careers, Kooyenga observed, resemble one circle. They may graduate with an accounting degree, earn their CPA credential, specialize in tax, focus on manufacturing, and then federal manufacturing specifically. “They keep zooming in,” he said. “That’s the way some people’s minds work, but not mine.
“That’s not the pursuit I feel offers the greatest value to my country, family and current job,” he continued. “I’m a
“
I was the only person in the state senate who served in a combat zone and knew how to do the debits and credits.
Venn diagram guy. You can keep drilling down, or you can pursue different pathways and create all these overlapping circles. I am probably the only person in the entire military who has the CPA credential; Top Secret military clearance; and public accounting, political and industry experience. I was the only person in the state senate who served in a combat zone and knew how to do the debits and credits.”
An Army Reserves group listens attentively to Lt. Col. Kooyenga.
Photo provided by Dale Kooyenga
A 20-year veteran, Kooyenga serves as a lieutenant colonel in the U.S. Army Reserves, specializing in military intelligence and civil affairs. “The threats the U.S. is dealing with cross multiple domains,” he said. “In particular, our competition with Russia and China is increasingly being fought via economic warfare and through information operation campaigns. The Army has recognized my business and political experience and has increasingly utilized my unique skill sets to modernize our doctrine, strategy and operations to engage in this new 21st-century warfare.”
Kooyenga’s “circles” allow him to speak the languages of politics, business across different industries and the military, all of which are also helpful in his current MMAC role.
Humble beginnings
A native of the Chicago suburb of Evergreen Park, Kooyenga is the son of a garbageman and a nurse who worked hard to send their four children to Christian schools but whose limited means resulted in Dale having to figure out how to pay for college on his own. His first step into higher education was taken at the community level for several reasons.
Kooyenga had a lawnmowing business — “a nice little side job with 45 or 50 customers” — that he did not wish to
surrender. “I was making good cash money, and community college was affordable,” he recalled. “Additionally, I wasn’t an outstanding student in high school, and I was able to play basketball at nearby Moraine Valley Community College, which was a great fit for me.” After earning an associate’s degree in accounting and business administration, basketball led him to Lakeland University, where he graduated with a bachelor’s degree in accounting and business administration a week before the 150-hour requirement for CPA licensure went into effect.
Following graduation, Kooyenga landed a job at KPMG’s Milwaukee office, where he rose to senior manager and consulted with many of the state’s largest health care, manufacturing, financial services, government and not-for-profit entities. He also earned his MBA at Marquette University while there. Working in one of the smaller cities nationally for a Big 4 firm afforded him the opportunity to serve clients in disparate industries. “Once again, go back to the Venn diagram,” he said.
War looms
Like many of his contemporaries, “9/11 changed everything” for Kooyenga. His two brothers joined the military, which prompted him to contemplate how they and fellow Americans were stepping up. “I just felt like I had to serve,” he said. KPMG was supportive when he joined the Army Reserves and left for a year of training followed by a year of active duty in Iraq. During this time, he maintained both his public accounting and military careers.
Kooyenga returned from Iraq to several speaking engagements. “At the time, Wisconsin was experiencing some
In 2019, he spoke at the WICPA Not-for-Profit Conference.
Kooyenga gives a lecture about the business climate in southeastern Wisconsin at the 2024 WICPA Business and Industry Conference.
Photo provided by the WICPA
Photo provided by the WICPA
doing so, he was beginning a third career. “I just kind of stayed in all of them — a CPA career because I enjoyed it and needed to support my family, a political career because I thought I was making a difference, and a military career because I really appreciate the mission and the impact.”
In fall 2010, Kooyenga was elected to represent the 14th District for the Wisconsin State Assembly and was sworn into office in January 2011 while he simultaneously left KPMG. He and three colleagues formed the “CPA Caucus,” a group of fiscally conservative legislators and CPAs in the assembly and senate who analyzed Wisconsin’s finances and pursued solvency through responsible budgeting, lowering taxes and overall transparency. “We found $1 billion in the University of Wisconsin System that led to the longest tuition freeze in Wisconsin history,” said Kooyenga. “Wisconsin also had one of the largest GAAP deficits in the country — and today that GAAP deficit is gone.”
Kooyenga announced his campaign for the Wisconsin State Senate’s 5th District in September 2017 and won the November 2018 election, serving the senate for four years as a member of the Joint Committee on Finance. During his 12 years in political office, he also was chief financial officer at two technology companies.
His passion for public service originated during childhood: His parents raised him with a love for family, community and country. “And 9/11 brought it to a whole new level. It’s just gained momentum since then.”
“ Milwaukee is a great community — so much is moving in the right direction. This is a great place to raise a family and have a career.
On the home front
Kooyenga has lived in Greater Milwaukee for 24 years, and it is where he and his wife, Jennifer, raise their four children, Grant, 16; Taylor, 15; Quin, 13; and Ada, 11.
“Milwaukee is a great community — so much is moving in the right direction,” he said. “This is a great place to raise a family and have a career. But there are a lot of things we need to address and improve upon, such as Milwaukee’s public school system and the nation’s largest gap in prosperity between our white, Black and Hispanic citizens. We need more people to move here, live here and stay here. Success means solutions that, policy-wise, will help move us in the right direction and elevate the Milwaukee brand.”
Kooyenga’s fondness for the area led him to the MMAC post. He believes his successful approach in politics and on the battlefield will also translate to the boardroom.
Kooyenga converses with a collegue at the MMAC office.
During his time in political office, the Republican represented a very conservative district that became Democrat-leaning over time. “But I always treated everyone with respect,” he said. “I wanted to hear their ideas and never engaged in a cutthroat political culture war.”
That practice found similar success on the world stage: “In Iraq, in 2008, we literally sat down with the enemy and talked about what we had to do to form reconciliation and get things on the right path. We realized an 80% reduction in violent acts because of that approach.”
He now employs this strategy in southeast Wisconsin. “I focus on policy solutions and pragmatism and the fact that I believe most of our citizens want the same things. They want a safe space, they want to learn, and they want to be financially solvent,” he said. “The MMAC is a bipartisan, nonpartisan, ‘no-partisan’ organization, and we just want to seek solutions for our community. We’re not looking for any one party to win.”
As president, Kooyenga meets with leaders from all around the state — from CEOs of the largest companies, such as Johnson Controls and Northwestern Mutual, to those with only a handful of employees. He shares the business community’s concerns and possible solutions with elected officials at the federal, state and local levels and seeks to increase the area’s presence in international trade.
“
My career has been this remarkable experience of meeting different people in different industries in different places in different times. It provides enrichment that adds value to our business community.
He’s confident that his accounting background, servant spirit and Venn-diagram perspective will help achieve those goals.
“My career has been this remarkable experience of meeting different people in different industries in different places in different times,” he said. “It provides enrichment that adds value to our business community.”
Sharon Zalewski is a freelance writer and editor based in Richfield, Wisconsin. Contact her at sharonzalewski141@gmail.com.
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MARCH 20 BUSINESS & INDUSTRY SPRING CONFERENCE
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Sunrise, Sunset
Will the sun rise on a new tax bill this year with the TCJA sunset looming?
By James D. Brandenburg, CPA, MST
In the 2024 presidential election, former President Trump secured 312 electoral votes, winning a second term in the White House. Republicans were also able to flip four seats in the Senate, with a final breakdown of 53 Republicans and 47 Democrats (including two Independents that caucus with the Democrats). In addition, Republicans retained control of the House by a 220–215 margin, with 218 needed for a majority. Thus, Republicans were able to gain control of all three groups of the tax legislative process. Possessing this control will have a significant impact on what tax changes are proposed and how tax bills move through Congress.
Budget reconciliation: Republican control of Congress
Many accountants are familiar with doing a bank reconciliation. It is an important task every business does on a regular basis. When one party controls Congress and the White House, a different type of reconciliation is used to pass tax legislation — budget reconciliation.
Use of reconciliation is a special rule in Congress to enact certain legislation. It allows a bill to pass with only a simple majority in both the House and Senate. This means the use of a filibuster (which requires 60%, or 60 votes) is not an option for the Senate to stop a reconciliation bill.
Reconciliation is a political power play: One party controls the entire process with a bill, and the other party cannot stop it. While there are many detailed rules that must be followed to pass a bill under this approach, the party with majority control usually crafts the reconciliation bill in such a way that it will obtain all the necessary votes within its party to push the bill through.
Look for the Republicans to use reconciliation to pass its tax bill this year. Top Republicans in Congress have already indicated their intention to use the reconciliation route for a tax bill. A key part of the reconciliation process is for House and Senate Budget Committees and top leaders to adopt a budget resolution that provides the amount of the tax cut during the budget period and the reconciliation instructions. They must decide if the tax cut will be large enough to cover all the items on their tax wish list or be a more modest amount due to concerns over the federal debt. The tax writing committees, House Ways & Means and Senate Finance, then draft a tax bill that fits within these parameters.
“ An article in the September/October 2024 issue of On Balance addressed the 2025 sunsetting of the TCJA, as we felt it certain to be a major task facing Congress this year.
Outlook for tax provisions in a 2025 tax bill
While it’s still early in the process, we should still look at the provisions that might make up this year’s tax bill. These can be broken down into two categories: The Tax Cuts and Jobs Act (TCJA) and the tax proposals unveiled during the 2024 campaign.
The Tax Cuts and Jobs Act
An article in the September/October, 2024 issue of On Balance addressed the 2025 sunsetting of the TCJA, as we felt it certain to be a major task facing Congress this year. Here are some observations and question marks on selected TCJA provisions for this year’s tax bill:
• Look for Republicans to extend the individual income tax cuts enacted under the TCJA. But for how long? It is uncertain for how many years the tax cuts will be extended.
• The 20% Qualified Business Income (QBI) deduction for pass-through businesses and sole proprietorships will also likely be extended. This was a key part of the TCJA.
• Will the $10,000 SALT deduction cap be increased or removed entirely? It is unlikely it will remain at $10,000 after 2025. However, it is also unclear when the SALT cap change would be effective and how long it would last.
• Will the $2,000 child tax credit be increased as discussed during the campaign this year? If so, to what amount ($3,000? Or more?), and when will the change first apply?
• It is likely a tax bill will focus on and adopt the following key business provisions:
o (1) Research expenditures
o (2) Interest deduction limits
o (3) Bonus depreciation
However, what the specific changes will be with these items and when they will take effect could impact businesses in 2025 — and possibly 2024.
• Last, the doubling of estate and gift exemptions in the TCJA is also expected to be part of the tax bill this year and not allowed to sunset.
New tax proposals unveiled during the 2024 campaign
Some of these proposals are likely to be part of this year’s tax bill:
• No tax on tips: The details and effective dates of this are uncertain.
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What the specific changes will be with these items and when they will take effect could impact businesses in 2025 — and possibly 2024.
• No tax on overtime: The details and effective dates of this are also uncertain.
• No tax on Social Security benefits: According to reconciliation rules, it is unlikely this item could be part of a tax bill using reconciliation. Therefore, if no tax on Social Security benefits is to move forward, it may need to be part of a separate bipartisan bill.
• Corporate tax rate cut to 15% for products made in the U.S.: Details and effective dates of this provision are uncertain.
• Tax deduction for interest on auto loans for vehicles made in the U.S.: There are no specifics yet on this item.
• Tax deduction for home generators: There are no specifics yet on this item either.
• Tax credit for family caregivers: There are no details yet.
• IRS funding for enhanced tax audits could be curtailed.
• Scaling back energy incentives from the Inflation Reduction Act of 2022 could happen.
• “Pillar 1” and “Pillar 2” of foreign tax policy, which are being negotiated now with other countries, might be in doubt.
One area that often surfaces with a tax bill is whether there will be any “offsets,” or tax increases, to help pay for the tax cuts in the bill. It has been suggested that some of the tariffs floated by the new administration could be considered an offset, although it is unclear how the reconciliation rules will view tariffs. Other possible offsets might be cutting back on energy incentives (as noted above) from the recent Inflation Reduction Act.
Once the House and Senate leaders set their mark for the net tax cuts in their budget resolution, the reconciliation process moves forward, and the tax writing committees must determine which of the above tax changes they can afford to include in the tax bill.
Timing for the tax bill
Generally, reconciliation tax bills take time to garner consensus among the key players in Congress, and this pushes the bill to the latter half of the year. For this year, the
KEEPING COSTS DOWN FOR
timing could differ. House Majority Leader Steve Scalise indicated soon after the election results came in that the Republicans may try to move the tax bill using reconciliation and do this in the first 100 days of the new administration. However, the decision process on this is still fluid. In early December, some Republican senators indicated they might consider initially pushing a separate reconciliation bill covering energy, immigration and defense items, which could push the tax bill (also handled under reconciliation) to later in the year — perhaps summer or fall. Thus, the timetable of the tax bill this year is uncertain.1
There is also discussion that a second tax bill might be pushed this year that would be bipartisan and not follow the reconciliation route noted above. Congressional leaders from both sides would need to agree on the items and terms of such a bill.
We will continue to keep you posted as the tax bill moves ahead in 2025. Stay tuned.
James D. Brandenburg, CPA, MST, is a tax director with Sikich in Brookfield. Contact him at 262-754-9400 or jim.brandenburg@sikich.com.
Navigating the Path to Audit and Attest Quality Management
Four new standards will soon require firms to take a risk-based and scalable approach to designing, implementing and operating a system of quality management. Here’s some guidance to get you started.
By Andrea Wright, CPA, and Melanie Barthel, CPA, CPCU
In December 2025, four new, interrelated quality management standards will go into effect. The scope of the far-reaching standards will require significant changes to firms’ existing systems of quality control for audit and attest engagements. The new standards include:
• Statement on Quality Management Standards (SQMS) No. 1: “A Firm’s System of Quality Management”
• SQMS No. 2: “Engagement Quality Reviews”
• Statement on Auditing Standards No. 146: “Quality Management for an Engagement Conducted in Accordance With Generally Accepted Auditing Standards”
• Statement on Standards for Accounting and Review Services No. 26: “Quality Management for an Engagement Conducted in Accordance With Statements on Standards for Accounting and Review Services”
Primarily, these standards will require a shift from a policies-based approach to a risk-based approach, incorporating a risk assessment and monitoring and remediation process into a firm’s system of quality management (SQM).
No matter where you are on your SQMS implementation journey, now’s the time to devote meaningful thought to the implementation process and develop your road map to compliance.
Guidance for firms
In September 2023, the AICPA released a practice aid, “Establishing and Maintaining a System of Quality Management,” to assist firms with their SQMS implementation. The practice aid consists of three files: a guide for sole practitioners, a guide for small to mediumsized firms and an example risk assessment (ERA) template. These resources can help firms design a risk-based SQM by
“
No matter where you are on your SQMS implementation journey, now’s the time to devote meaningful thought to the implementation process and develop your road map to compliance.
establishing quality objectives, identifying quality risks and designing quality responses. Here’s an overview of each of these terms in the context of the standards.
Quality objectives
Quality objectives are the desired outcomes in relation to the components of a firm’s SQM. Firms will need to establish quality objectives for each component of their SQM (except risk assessment and monitoring and remediation) as follows:
• Governance and leadership
• Relevant ethical requirements
• Acceptance and continuance
• Engagement performance
• Resources
• Information and communication
Each of these SQM components is listed as a separate tab within the ERA template. Certain quality objectives are prescribed by the standard and included within the practice aid. The standards also require firms to establish additional quality objectives as needed to achieve their SQM objective.
Quality risks
Quality risks are essentially things that would prevent a quality objective from being achieved. The practice aid provides certain quality risks for each relevant quality objective. However, it’s important to note that these are just sample risks. Firms will need to complete a thorough risk assessment based on the facts, circumstances and nature of their practice. Solely utilizing the predefined risks without modification won’t achieve compliance with the standards or be effective in managing your firm’s SQM — risks must be tailored to your firm’s practice.
Within the practice aid, columns are also provided to assess the likelihood and impact of each risk, with a low, medium and high option for each factor. This is solely to assist firms in identifying whether a quality risk exists — the standard itself doesn’t require a formal risk ranking or assignment of likelihood and impact. Still, it’s a useful tool for firms to gauge the degree of risk in designing an appropriate response. Additionally, the practice aid doesn’t consider risks assessed as low for both likelihood and impact as quality risks. Another key point is quality risks should be evaluated before the effectiveness of controls (like the concept of inherent risk in the audit standards).
Quality responses
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Quality responses are the firm’s policies and procedures that address the identified quality risks. Think of these as your firm’s controls in place. Some of these may be part of your firm’s existing system of quality control documentation. The standards also specify certain required responses, which are included in the practice aid, as well as other example policies and procedures. However, like quality risks, you’ll need to tailor responses based on your firm’s circumstances to ensure compliance.
Additionally, the AICPA’s practice aid includes a helpful checklist with tips on how to complete a risk assessment. Particularly, “Practical Tips on Designing and Performing the Risks Assessment Process” may be helpful to firms who haven’t begun or are in the early stages of their implementation journey. Notably, the checklist suggests firms:
• Determine who will own and lead the implementation.
• Determine the resources to be involved in the implementation.
• Develop a timeline for implementation.
• Discuss your implementation plan with your peer reviewer.
• Plan risk assessment brainstorming sessions.
• Perform a gap analysis to identify quality risks without an appropriate quality response.
With just under a year left until the new standards go into effect, it’s critical for firms to hone their implementation plans now and consider all available resources that’ll support compliance.
Finally, the practice aid provides guidance on the monitoring and remediation process component, which addresses the evaluation of the design, implementation and operation of the SQM, including the identification and timely remediation of any identified deficiencies. This information contributes to a firm’s SQM evaluation, which is required to be first performed within one year following December 2025 and then on an annual basis.
With just under a year left until the new standards go into effect, it’s critical for firms to hone their implementation plans now and consider all available resources that’ll support compliance.
Reprinted with permission from Insight magazine, a publication of the Illinois Society of CPAs.
Andrea Wright, CPA, and Melanie Barthel, CPA, CPCU, are both partners at Johnson Lambert LLP.
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Leveraging AI in Forensic Accounting and Litigation Support
By Christine Fabbro Brunner, CPA, CFE, MAcc
The arrival of artificial intelligence (AI) is causing a seismic shift in the field of forensic accounting and litigation support. It’s critical for CPAs to understand these changes to stay ahead in this quickly changing field. AI isn’t just a buzzword; it’s a tool that can strengthen accuracy, efficiency and effectiveness in forensic investigations and litigation support.
Deciphering data
Forensic accounting frequently entails meticulously reviewing substantial quantities of information and searching for inconsistencies, deception or budgetary alterations. This activity is often slow and requires many individuals to work long hours. However, AI-fueled applications can rapidly and faultlessly dissect big data collections, identifying outlines and anomalies that could elude the human eye.
A subset of AI known as machine learning1 excels at deciphering complex patterns and relationships found in data. It trains itself by learning what distinguishes different instances of fraud or other malicious activities within existing data samples. This capability allows auditors to concentrate on more subtle and high-risk behaviors. As a result, AI can detect fraudulent transactions and identity theft.
Support for lawsuits often includes an intensive review of documents, emails and messages. Automation through AI-powered e-discovery tools can streamline this process, extracting useful information and quickly categorizing documents. Tools that use natural language processing,2 a field of AI, can understand and interpret human language, enabling them to parse through unstructured data like contracts and emails to pinpoint critical information. One of the easiest and simplest examples of this is Adobe Acrobat’s AI Assistant,3 which is now offered through their application. AI Assistant can help users interact with documents and PDFs in a variety of ways. It can summarize crucial concepts and themes from documents, among other features.
These tools offer several advantages:
• Save time. Using these tools allows CPAs to complete reviews faster than through manual review alone.
1 https://www.ibm.com/topics/machine-learning
2 https://www.ibm.com/topics/natural-language-processing 3 https://www.adobe.com/acrobat/generative-ai-pdf.html
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AI isn’t just a buzzword; it’s a tool that can strengthen accuracy, efficiency and effectiveness in forensic investigations and litigation support.
• Improve accuracy. They reduce the chances of human error, ensuring that all documents are coded consistently and accurately.
• Enhance organization. These tools enable better document organization, making it easier to find important information or examples quickly.
Predictive analytics
Fraud detection and prevention is an ideal field for AI’s predictive analytics4 capabilities. By analyzing vast historical datasets and identifying patterns indicative of fraudulent behavior, AI systems can make predictions and prevent fraud before it occurs. CPAs can deploy AI tools to continuously monitor transactions and financial activities, receiving realtime alerts for suspicious behavior.
AI can also improve internal controls by identifying weaknesses and suggesting improvements. This proactive approach not only helps detect fraud early but also strengthens the overall financial integrity of organizations.
Pros
AI in forensic accounting offers many advantages, with increased efficiency and associated cost savings among the most significant. Processes such as automated data analysis and document review significantly decrease the hours required to investigate a company’s financials, allowing CPAs to take on more cases simultaneously. The ability to handle more cases translates into lower client costs and higher profitability for firms.
4 https://www.ibm.com/topics/predictive-analytics
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CPAs must continuously enhance their skills to effectively use these tools and stay updated on the latest AI-based forensic accounting technologies.
Additionally, AI tools can manage monotonous and routine tasks, freeing up CPAs to focus on more complex and value-added work. This shift not only increases job satisfaction but also enhances the potential for forensic accountants to apply their expertise, improving the overall quality of investigations and litigation support.
Cons
Despite AI’s substantial benefits, integrating it into forensic accounting practices presents challenges. AI’s effectiveness depends on neural networks trained on vast datasets. As firms embrace AI, they must ensure data quality, as poor data can lead to inaccurate results.
Integrating AI requires significant investment in technology and training. CPAs must continuously enhance their skills to effectively use these tools and stay updated on the latest AI-based forensic accounting technologies. Additionally, data privacy and security are critical concerns. AI systems handle sensitive financial data, and maintaining
the confidentiality and integrity of this data is paramount. CPAs must enforce robust data security measures and comply with regulations to protect client information.
The bottom line
Forensic accounting and litigation support are being fundamentally reshaped by AI, delivering enhanced data analysis, greater efficiency and more powerful fraud detection. AI technologies are essential for CPAs who want to keep pace and deliver higher-value services to clients. By understanding and leveraging AI, CPAs can uncover new insights, sharpen investigations and provide more effective litigation support.
Christine Fabbro Brunner, CPA, CFE, MAcc, is the CEO and founder of Brunner Sierra Group. Contact her at christine@ brunnersierragroup.com.
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Thuy T. Barron, CPA, has been selected as regional director of NASBA’s 2024–2025 board of directors and appointed chair of NASBA’s Inclusion Committee. Barron, a managing director at Deloitte Tax LLP in Milwaukee, is also an inclusive leader who serves on the GES and Milwaukee Office Inclusion Councils, driving diversity and inclusion strategy. She is a board member of the Wisconsin Accounting Examining Board, member of the NASBA Relations with Member Boards Committee and a former member of NASBA’s CEO Selection Advisory Committee.
Dean Basten, CPA, secretary/treasurer and CFO at Miron Construction Co. in Milwaukee, has been recognized in the 2025 Wisconsin Titan 100, an annual list of the state’s top 100 CEOs and C-level executives.
Brian Falk, CPA, a member of the audit team at Ritz Holman CPAs, has been promoted to audit principal.
Ethan Hoffman, CPA, has been promoted to audit manager at KerberRose in Green Bay.
Mitchell Jussila, CPA, has been promoted to principal at Chortek LLP in Waukesha.
Jim Karls, CPA, CGMA, has joined Cedar Community, a retirement community in West Bend, as CFO.
Dale Kooyenga, CPA, president of the Metropolitan Milwaukee Association of Commerce, was named to BizTimes Milwaukee’s list of 2024 Notable Veteran Executives.
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Adam Kuczynski, CPA, has been promoted to partner at Wegner CPAs in Madison.
Hannah Lanser, CPA, has been promoted to partner at Wegner CPAs in Madison.
Morgan Mielke, CPA, has been promoted to senior vice president of finance at Premier Community Bank.
LeeAnn Prochaska, CPA, has been promoted to principal at BDO USA in the Madison office.
Nathan Roth, CPA, has been promoted to partner at Andaloro, Smith & Krueger LLP, leading the department that focuses on small business and individual tax and accounting services.
Adam Updike, CPA, a member of the tax team at Ritz Holman CPAs, has been promoted to tax partner.
VESTA CPA has received the Employ Humanity® Excellence Award, an annual award that recognizes an employer in the United States that has demonstrated excellence to the comprehensive well-being of its employees, industry and communities. Recipients of the award are top-rated employers of choice that have demonstrated excellence in servant leadership, workplace culture and, most importantly, making our world a better place for humanity. Vesta is a CPA-led advisory firm with more than 70 team members. The firm offers services in accounting, wealth management and business advisory from offices in Fond du Lac, Sheboygan, Madison and Milwaukee’s North Shore.
Hannah Lanser Nathan Roth Adam Updike
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Fraud Prevention 101: Protecting Your Personal Data
By Justin Shemanski
Benjamin Franklin famously said, “In this world, nothing is certain except death and taxes.” Had he been around in the 21st century, he’d likely have added a third item to his list: fraud.
Deception is nothing new — even the ancient Greeks and Romans participated in fraudulent schemes involving insurance and taxes (both of which remain popular targets to this day). If there’s a way to make a quick buck through unscrupulous means, you can bet it has been tried!
Today’s scams are more high-tech than those that took place in Julius Caesar’s day. Technology has ushered in the Digital Age, and fraudsters have adapted by targeting data and other sensitive information found online. Individuals and organizations must learn how to protect themselves to avoid falling prey to the latest schemes, and the best way to accomplish this is through awareness and education.
The impact of fraud
The third week in November has been designated as National Fraud Awareness Week, a global event designed to raise awareness through fraud prevention and education. It’s a good start, but organizations must be vigilant yearround. Statistics paint a sobering picture: According to Occupational Fraud 2024: A Report to the Nations,1 organizations worldwide lose an estimated 5% of their annual revenue to fraud. And in 2023, consumer losses related to fraud exceeded $10 billion. Consequences extend beyond the financial: Fraud can negatively impact a person’s quality of life, leading to emotional distress and mental health issues, affecting personal and professional relationships, and eroding trust in public institutions.
While the definition of fraud is straightforward — an intentional act of deceiving someone to secure an unfair financial or personal gain — there is no one-size-fits-all
“ Fraud can negatively impact a person’s quality of life, leading to emotional distress and mental health issues, affecting personal and professional relationships, and eroding trust in public institutions.
scheme. Fraud is pervasive and takes many forms, including phishing, skimming, spoofing, identity theft, ransomware attacks and tech support scams. From pyramid and Ponzi schemes to Nigerian letter fraud, chances are you have at least a passing familiarity with many of the more popular scams.
DOR is committed to protecting customer information
“Integrity and security are key values of the Department of Revenue,” said Wisconsin Department of Revenue Secretary David Casey. “That means protecting taxpayer personal information and being a trusted partner to tax professionals. To that end, we are heavily committed to leveraging advanced data security technologies and processes to ensure taxpayer information is safe and secure.”
Tax professionals, accounting firms and government agencies like DOR are particularly vulnerable to attack. Cybercriminals target these organizations because they possess valuable client data and e-filing credentials. Spear phishing scams from those posing as clients, tax software or cloud storage providers, and the IRS are common. Once obtained, this financial information can be used to create fraudulent tax returns and claim false refunds. Every year, Wisconsin firms fall victim to these scams — and the repercussions are often long lasting, as stolen data can be misused for years to come.
The best way to protect your clients is by protecting yourself. The IRS website is a great source for learning more about tax fraud and how to prevent it. Visit its Identity Theft Information for Tax Professionals2 page for security guides and other great resources.
Monitoring and reporting data breaches
A data breach is any security incident that involves unauthorized access, loss or disclosure of sensitive or confidential information. This usually involves someone locating and taking advantage of a vulnerability (human or technology). Either way, it’s serious — and the sooner you spot it, the better. Look for the following data theft red flags:
2 https://www.irs.gov/identity-theft-fraud-scams/identity-theft-information-for-tax-professionals
• You receive an increase in rejects because a return was already filed.
• Clients receive IRS or state authentication letters when they haven’t yet filed a return.
• Clients receive unexpected refunds, transcripts or notices about IRS online accounts.
• The number of returns e-filed with your EFIN or PTIN exceeds the number you submitted.
• You receive responses to emails you did not send.
• You observe unusual computer activity (e.g., running slower, lockouts or a moving cursor).
situation to the relevant authorities and individuals, including the following, may mitigate damage.
• IRS Stakeholder Liaison. They will notify IRS Criminal Investigation and others within the agency. For Wisconsin, contact CL.SL.Area.6@irs.gov or call 206-946-3703.
• Local law enforcement.
• States in which you prepare state returns. In Wisconsin, email DORIDTheft@Wisconsin.gov. Include your organization’s name, a brief description of the incident and contact information for the individual who will be working with DOR. Do not include personally identifiable information for impacted employees or customers in your email. DOR’s fraud team will contact the firm (typically the same day) to discuss next steps. For other states, see the Federation of Tax Administrators’ Report a Data Breach3 page for contact information.
• Security experts. It’s important to determine the cause and scope of the breach and to prevent further breaches from occurring.
• Affected staff and clients. Wisconsin statutes require most businesses to notify individuals if an unauthorized person has acquired their personal information. Consult Wisconsin’s Data Breach Notification Law4 for more information.
• Insurance company. Check to see if your insurance policy covers data breach mitigation expenses.
3 https://taxadmin.org/report-a-data-breach/
Fraud may be increasingly commonplace in today’s digital world, but remaining vigilant and knowing what to do in the event of a data breach will help you remain one step ahead of cybercriminals.
DOR provides a form for taxpayers and tax professionals to report potential identity theft. Any taxpayer who believes they are a victim of identity theft is encouraged to fill out and return Form ID-1005 to notify DOR that their tax account may be impacted.
Fraud may be increasingly commonplace in today’s digital world, but remaining vigilant and knowing what to do in the event of a data breach will help you remain one step ahead of cybercriminals.
Justin Shemanski is bureau director of the Office of Criminal Investigation for the Wisconsin Department of Revenue. Contact him at 608-266-0286 or justin.shemanski@wisconsin.gov.
5 https://www.revenue.wi.gov/DORForms/i-100f.pdf
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Retirement Plan Forfeitures Under the Spotlight
By Joseph Topp, CPA
An unheralded IRS rule change, amplified by a surge in ERISA litigation, has prompted plan sponsors to reevaluate how they handle forfeiture balances in their participant-directed employee retirement plans.
What are forfeitures?
Employer contributions, such as profit-sharing (nonelective) and matching contributions to a defined contribution plan, may be subject to a vesting schedule. The nonvested portion of a participant’s account balance when they terminate employment and receive their distribution is the primary source of forfeiture dollars. Another example of a source of forfeiture dollars is the nonvested portion of a “lost” participant’s account balance when the plan disburses the vested portion of the account according to the plan document (e.g., IRA rollover, escheatment, etc.). The plan’s forfeitures represent assets of the plan; therefore, plan fiduciaries have an ERISA duty to prudently manage these assets for the exclusive benefit of the plan’s participants. The plan documents will detail permissible uses of forfeitures, which may include any or all of the following:
1. Reducing employer contributions
2. Paying nonsettlor plan expenses
3. Reallocating as additional employer contributions to all participants
Not all plan documents offer the same flexibility around forfeiture use, making it critical that plan fiduciaries understand the provisions of their plan and establish a process around forfeiture utilization that ensures compliance.
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Not all plan documents offer the same flexibility around forfeiture use, making it critical that plan fiduciaries understand the provisions of their plan and establish a process around forfeiture utilization that ensures compliance.
IRS issues forfeitures regulations
Previously, the IRS’s informal guidance was that plan forfeitures were to be used in the year they were generated. Early in 2023, the IRS issued revised regulations for using forfeitures in tax-qualified retirement plans (REG122286-18). The 2023 rule now requires plan sponsors to use forfeitures by the end of the plan year following the year in which the forfeitures were generated. To assist plan sponsors in complying, the IRS provided a transitionary relief period that allows plan sponsors to use any forfeitures accumulated during or before 2024 but no later than the end of the 2025 plan year.
Newest litigation target
The latest target for ERISA litigation in the qualified retirement plan space is focused on plan sponsors’ use of forfeiture dollars. Late in 2023, a plaintiff’s law firm sued four large employers over their use of plan forfeiture dollars.
ERISA Section 404(a)(i)(A) states that plan assets must be used for the exclusive purpose of providing benefits to participants and defraying reasonable plan expenses of administering the plan. The initial spate of cases has focused on plan sponsors who have elected to use forfeitures to offset employer contributions rather than applying them against plan administrative expenses, which otherwise were charged to participant accounts or reallocated to all current plan participants. The plaintiff argued that this decision by the plan sponsor, reducing their cost to fund the required contribution, served the company’s interests over those of the plan participants.
Several similar cases have been filed in 2024, and the industry waits for the guidance the courts will provide. To date, there have not been any court rulings issued, but several cases have survived initial motions to dismiss. With growing scrutiny on this subject, it would be prudent for plan sponsors to begin evaluating their procedures for handling these plan assets.
Protections for plan sponsors
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Your plan document will govern the options you have for the permitted use of the plan’s forfeitures. Typically, the document will specify all of the IRS permissible uses, thus allowing the plan sponsor flexibility each time they use their accumulated forfeitures. The decision to choose between two plan-document permitted uses for forfeitures is likely to be viewed as a fiduciary decision. If your organization always uses forfeitures to reduce plan expenses or reallocates them back to participants, your exposure is limited to acting in accord with the IRS’s prescribed timeline. If your organization’s intended practice is to use forfeitures to reduce the employer contribution, you might want to consider amending your plan document to remove the flexibility for plan fiduciaries to choose how to use these balances, by either eliminating all other options or specifying the sequence in which the forfeiture dollars will be used. This amendment to your plan document is a settlor function and could provide protection for the plan’s fiduciaries when executing the use of your plan’s forfeitures going forward.
Conclusion
Forfeitures represent an asset of the plan; therefore, ERISA requires plan sponsors to manage them for the exclusive benefit of the plan participants. Consider the following steps to ensure your organization has a prudent process in place for handling these plan assets.
Forfeitures represent an asset of the plan; therefore, ERISA requires plan sponsors to manage them for the exclusive benefit of the plan participants.
1. Review your plan document to determine that the permitted uses of forfeitures align with your organization’s intentions.
2. Consider amending the document to specify the sequence in which forfeitures will be used to offer some protection to the plan’s fiduciaries.
3. Collaborate with your plan’s recordkeeper to ensure you are administering this aspect of your plan in compliance with IRS regulations.
Joseph Topp, CPA, is a principal and senior vice president at Francis LLC. Contact him at 262-781-8950 or Joseph.Topp@FrancisWay.com. This discussion
Cost Segregation Industry Update
An engineering-based cost segregation study traditionally has been used to reclassify federal tax depreciation rates of real property from one lump-sum asset listed in a fixed asset system as a “building,” with a recovery period of 39 years, to multiple detailed entries that identify separate assets with shorter recovery periods, such as five, seven or 15 years. A study not only results in correctly identifying both the 1250 and 1245 components of a structure but also establishes a starting point for federal tax depreciation assets.
Over the last several years, there have been many tax law changes that affect how and why a competent study should be performed. Tax law changes over the last few years are numerous. This article addresses some significant modifications that have impacted the cost segregation industry.
At the time of this writing, there is pending legislation to bring back 100% bonus depreciation, effective 2023 going forward. However, its future will depend on the new Congress.
The Internal Revenue Service issued an updated Cost Segregation Audit Techniques Guide in June 2022. The guide includes detailed descriptions of the different types of studies, what should be included in a competent study, and all of the previously issued specific industry directives that show what assets might typically be considered as 1250 or 1245 property. It is important to note that these documents are not considered to be law — they are to be used only as a guide.
H.R. 1 – Tax Cuts and Jobs Act (TCJA) of 2017
Bonus depreciation was increased to 100% through Dec. 31, 2022, and then reduced to 80% for 2023. It is currently 60% for 2024 and will go down to 40% for 2025. There is proposed legislation that would bring bonus depreciation back to 100%, but at the time of writing it has not yet passed.
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A study not only results in correctly identifying both the 1250 and 1245 components of a structure but also establishes a starting point for federal tax depreciation assets.
In regard to modified accelerated cost recovery periods (MACRS), real property will continue to be depreciated over 39 years and 27.5 years (for residential rental property).
The previous requirement for property to be “original use” has been eliminated. Now, in order to qualify for bonus depreciation, the original use does not begin only with the initial property owner but instead when the building is placed into service with the current property owner (including acquired property). This means bonus depreciation now applies to both newly constructed buildings and used property acquired after Sept. 27, 2017. For example, a retail strip mall is acquired, and a cost segregation study is performed to identify all of the appropriate 1250 and 1245 improvements. All those assets with less than a 20-year life will (as of Sept. 27, 2017) be able to qualify for the applicable bonus depreciation and thus be deducted in the current year. Land improvements are considered 15-year property under MACRS (Asset Class 00.3) and, thus, will be able to be deducted at the applicable bonus depreciation rate in the current year. However, they need to be correctly identified and classified — and a proper cost segregation study accomplishes this.
The Protecting Americans from Tax Hikes Act of 2015 introduced the category of qualified improvement property (QIP) as any improvement to an interior portion of a
building that is nonresidential real property as long as that improvement is placed in service after the building was first placed in service by any taxpayer (Section 168(k)(3)). It specifically excludes expenditures for the following:
1. the enlargement of a building
2. elevators or escalators
3. the internal structural framework of a building
The QIP provisions are effective for property placed in service after Dec. 31, 2015.
The TCJA eliminated the separate definitions of qualified leasehold improvements, qualified restaurant
improvements and qualified retail improvements. These have all been replaced with the general grouping of QIP.
The depreciable life of QIP was to be reduced from 39 to 15 years, with 100% bonus depreciation (in the applicable year) being available for all assets with a life of 20 years or less. Unfortunately, Congress forgot to give QIP a 15-year life, and it remained 39 years; so it was not eligible for 100% bonus depreciation (in the applicable year). As a result, the taxpayer who spent $2 million on qualified interior improvements to their property did not receive a $2 million deduction in that current year but had to depreciate the entire amount straight-line over 39 years.
The QIP technical correction
The Coronavirus Aid, Relief, and Economic Security Act provides a technical correction for QIP property, allowing bonus depreciation or special straight-line MACRS depreciation over 15 years instead of 39 years, while making the change retroactive to Jan. 1, 2018. Net operating loss generated by the additional depreciation may be carried back for up to five years to recover taxes previously paid. Going forward, all QIP property is eligible to be deducted at a rate of 100% (2022), 80% (2023), 60% (2024) and 40% (2025).
Final regulations 263a
Under the final regulations 263a (effective Jan. 1, 2014 — T.D. 9636), a building and its structural components are considered a single unit of property. The “unit of property” for buildings consists of the building structure and building systems, which include the heating, ventilation and air conditioning (HVAC) systems; plumbing systems; electrical system; all escalators and elevators; fire protection and alarm systems; security systems; gas distribution systems; and other structural components identified in published guidance.
In addition to defining the “unit of property” for tracking expenditures, the IRS has separately issued regulations (IRC Section 168) detailing the rules for dispositions and partial dispositions of depreciable assets that include building structural components. Prior to Jan. 1, 2012, losses were not allowed for retired building components, and consequently, the replacement of building components resulted in the continued depreciation of both the property that was replaced and the property that replaced it. Section 168 has established a facts-based approach to determining whether work performed on a building or leasehold improvements should be considered a deductible repair or a capital expense.
Under these rules, the taxpayer can end depreciation of building components upon removal and recognize a loss. A proper cost segregation study includes costs by building system and will facilitate a taxpayer’s accurate reporting of losses when the component is disposed. In the case of existing property, the study should take into consideration the taxpayer’s fixed-asset accounting of the building’s original cost and aid in the identification of disposals that will occur as a result of the new capital improvements.
The numerous tax law changes have impacted both how a cost segregation study is performed and the methodology
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The numerous tax law changes have impacted both how a cost segregation study is performed and the methodology used.
used. Taking into account all of the different modifying rules has made cost segregation studies very complex. An engineering-based study that takes all of these rules into consideration is an essential part of the process in order to not only correctly identify the significant depreciation deduction, which will offset taxable income, but also correctly set up the starting point for federal tax depreciation.
Mark Vorkapich, ASA, is the director of cost segregation services at Gladstone Strategies & Solutions in Milwaukee. He has 25 years’ experience in performing cost segregation studies. Contact him at 414-418-8953 or mvorkapich@gladstonestrategies.com.
Thelma Welch Johnson, CPA (1934–2024)
Thelma Johnson, CPA, of Cumberland, passed away Monday, Nov. 11, at age 90. She attended Webster High School and earned a bachelor’s degree in accounting at the University of Wisconsin–Eau Claire. Johnson operated her own accounting practice for 30 years and served on the WICPA’s International Trade Committee from 1995–1997. She served on the boards of directors for several organizations, including Kinship Inc.; SOFTEC Education Inc.; the Thomas St. Angelo Public Library of Cumberland; and the Maple Plain Township Board, to which she was re-elected three times. Johnson was named 2006 Cumberland Citizen of the Year and received the 2013 Outstanding Volunteer Service Award from Kids International Ministries and the National Park Service Hartzog Award in 2014 for her volunteerism with the Ice Age Trail Alliance. Johnson engaged in other causes, such as Pink Ribbon Advocacy Inc. and Red Barn Theatre. She is survived by her four children, three granddaughters, and several nieces and nephews.
Michael Joseph McDonald, CPA, CGMA (1954–2024)
Mike McDonald, CPA, CGMA, passed away Sunday, Sept. 29, at age 70. He graduated with a bachelor’s degree in accounting from Marquette University in 1975 and served several businesses throughout his career, including Charter Manufacturing Company Inc., Horizon Home Care & Hospice Inc., FIS, Metavante Corp., Bowling Inc., Alterra HealthCare Corp. and RitzHolman CPAs. His love of classic cars inspired his involvement in the Wisconsin Region Antique Automobile Club of America, for which he organized car shows and served in several leadership positions over the years, including president. He is survived by his wife, Ann; a sister and brother; many other relatives and friends; and his two beloved Welsh corgis.
James J. McGillis, CPA (1936–2024)
James J. McGillis, CPA, of Hales Corners, passed away Sunday, Nov. 17, at age 88. A lifetime member of the WICPA, he graduated from Don Bosco High School and Marquette University. McGillis worked as a CPA at the beginning and end of his career, including as a manager at Robert A. Leack, S.C.; spent several decades as a hospital administrator, primarily at St. Mary’s Hill Hospital; and performed accounting and tax services for friends and family until recently. A past grand knight with the Knights of Columbus, McGillis was an active member of West Allis Council 3095 for 54 years, during which time he also served as treasurer of its charitable fund. McGillis is survived by his wife of 63 years, Joanne; four children; seven grandchildren; and many other relatives and friends.
Richard B. Nystrom, CPA (1944–2024)
Dick Nystrom, CPA, passed away on Monday, Oct. 28, at age 80. A lifetime member of the WICPA, he was born in Ashland and later moved to Superior, where he graduated from Central High School in 1962. He earned a bachelor’s degree in accounting from the University of Wisconsin–Superior in 1966 and a master’s degree in accounting from the University of North Dakota–Grand Forks in 1970. An entrepreneur, he owned an accounting practice, a real estate company and an equipment company in Eau Claire that specialized in petroleum product installation. Nystrom was an early member of the Superior Business Improvement District board of directors and served on the Superior school board from 1974–1980. He also served in leadership positions for the Northwest Wisconsin Workforce Investment Board and the Douglas County Revolving Loan Fund. Nystrom held memberships in the Elk Lodge, Masonic Lodge, Superior Development Association and Ducks Unlimited. He is survived by his wife of 56 years, Ruth; three children; six grandchildren; a sister; and nieces and nephews.
Michael Montgomery Penner, CPA, MBA (1938–2024)
Mike Penner, CPA, MBA, passed away Saturday, Sept. 28, at age 86. A lifetime member of the WICPA, he earned a bachelor’s degree in economics from Williams College in 1960 and an MBA in accounting and finance from Northwestern University’s Kellogg School of Management in 1962. He began his career in his hometown of Milwaukee at Reilly, Penner & Benton, a public accountancy firm cofounded by his grandfather, Carl Penner. During his 43 years at the firm, Penner rose to partner and was an invaluable tax advisor to clients. After retiring, he continued to serve clients as an independent CPA for 21 years. A sergeant in the U.S. Army Reserves from 1962–1969, Penner also was a leader in his church, serving as an elder and heading the Finance Committee at both North Shore Presbyterian Church in Shorewood and at Mountain Shadows Presbyterian Church in Tucson, Arizona. He served for a decade as a board member and treasurer for Planned Parenthood of Wisconsin, continuing the work begun by his grandmother, an early activist for women’s reproductive freedom in Illinois. The United Way also benefited from his volunteer leadership for over a decade. An avid golfer, he also served as president at the Chikaming Country Club in Lakeside, Michigan. Penner is survived by his wife of 64 years, Sally; three children; and six grandchildren.
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.
Business Development to the Letter
Categorizing your contacts makes prospecting as easy as ABC.
When it comes to business development, it’s important to know the difference between a suspect and a prospect — and which prospects are better than others. Understanding these distinctions helps focus your efforts to maximize results.
Knowing the difference
Suspects are potential clients you know nothing or next to nothing about. They require further research to determine whether they might be good clients. For example, a suspect might be a manufacturing firm on the outskirts of town that no one in your firm has contacted; nor do they have connections there. Prospects are potential clients you know something about or have had interactions with at some point. For example, a prospect might be a manufacturing firm that you have sent a proposal to in the past. Someone in your firm may know the CEO, CFO or controller.
Firms may make the mistake of pursuing suspects rather than prospects in their business development efforts. This can lead to wasted time, effort and dollars. Classifying your potential clients into three categories — A’s, B’s (prospects) and C’s (suspects) — will help to maximize your efforts.
The ABCs of prospecting
“A” prospects are potential clients your firm would love to work with. Their size, revenue, geography or industry fits your ideal client profile. They are the warmest leads—those you are confident have a need for your service. You already have a relationship with them. For example, you know their management team, you know their lawyer or banker, or they have attended your webinars or other events.
“B” prospects are potential clients you think you would like to have, but you don’t know enough about them to be certain. You’ve done enough research to believe they probably
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Firms may make the mistake of pursuing suspects rather than prospects in their business development efforts. This can lead to wasted time, effort and dollars.
fit the profile of your ideal client. Perhaps they’re in the right target industry, but you don’t know if they’re the right size. Maybe there is just not a strong enough relationship built between the two of you yet because you have interacted with them on isolated occasions only. The key is to try to move those B prospects to A prospects before you spend too much time and effort on them.
Additionally, B’s may be those A’s you sent proposals to unsuccessfully. They may have suggested contacting them in the future. In such cases, you wouldn’t actively pursue them for a while.
“C” prospects are suspects. They are potential clients that you know little or absolutely nothing about. They may or may not fit the profile of an ideal client based on size, revenue or industry because you haven’t done enough research to know for sure. Perhaps they’re in an emerging industry niche for the firm, a company that you just learned about or a startup. This is the most challenging type of potential client to turn into an actual client; therefore, make sure you do the research before you actively pursue them.
Focus on A prospects
In your practice development efforts, a good rule of thumb is 60/30/10, meaning 60% of your efforts should be
dedicated to the A’s, 30% to the B’s and 10% to the C’s. Ultimately, the goal is to move the C’s to B’s, the B’s to A’s and the A’s to clients. The following strategy can help you do this.
1. Find out who in the firm has contacts at the A prospect businesses, and determine how you could help these prospects; then craft a strategy to get in the door.
2. Learn more about the B prospects, including who their attorneys and bankers are, and make the necessary introductions to warm up the relationship. Consider inviting these prospects to seminars, webinars, open houses and other events, and ask them if they would like to be added to your mailing list to receive your publications. You might also consider connecting with them on LinkedIn.
3. Conduct more research on suspects. It will take considerable time and effort before they become B or A prospects.
There may be times, based on circumstances, when potential clients move down instead of up in the prospect order. In these instances, continue the strategy outlined above.
Conclusion
For small to midsize firms, business development traditionally has been left to a few key partners or senior managers in the firm or, if the firm has the resources, a business development specialist. However, all firm members who think strategically can contribute to the prospecting effort at some level. Those firms that instill a focused business development mindset or a business development-curious culture most often are the firms that win more clients and enjoy continued growth. Those who categorize their prospects to streamline their efforts may achieve these goals much more quickly and cost effectively.
Timothy Allen, MBA, PAFM, is chief growth officer for MBE CPAs, a Baraboo-based, midsize public accounting firm with 19 offices across the U.S. He has more than 20 years’ experience helping public accounting firms grow and operate more efficiently. Contact him at tallen@mbecpa.com.
WICPA President and CEO Tammy Hofstede, second from right, attended the 2024 AICPA & CPA/SEA Leadership Conference with (from left) WICPA Chair-Elect Stacy A. Stinson, CPA, MBA; AICPA Vice Chair Lexy Kessler; and AICPA President & CEO Barry Melancon.
Doug Van Der Aa speaks at the 2024 WICPA Tax Conference.
The Tax Conference was held Nov. 11-12 with nearly 200 in-person attendees.
Editorial Planning Committee met to discuss topics for 2025 publications.
Bryan Smith and John Higgins answer questions during the “Ask the Experts” session at the WICPA Accounting Technology Conference.
The WICPA Educational Foundation board of directors met in December.
The WICPA High School Educator Accounting Symposium was held on Nov. 15.
Channing Mavrellis, of FinCen, speaks at the WICPA Accounting & Auditing Conference about information on beneficial ownership reporting and how to comply with the law.
The Legislation Review Committee met with the Wisconsin Department of Revenue to discuss tax topics.
June Norman’s Small Practitioner roundtable group met at the WICPA in December.
Wisconsin State Sen. Dora E. Drake discusses policies at the Public Policy Committee meeting in December.
Wisconsin State Rep. Robert Wittke, on the far right, joined the Public Policy Committee meeting to discuss 2025 agenda items.
Dave Molenda speaks about the art of comfort zone expansion at the 2024 WICPA Business & Industry Fall Conference.
The WICPA board of directors met in October.
Save The Date
Friday, May 9, at 5 p.m. Brookfield Conference Center
Save the date for the WICPA’s signature event of the year to:
• Recognize membership milestones
• Elect the 2025–2026 Board of Directors
• Present the 2025 Excellence Awards
• Enjoy dinner, drinks and networking
Complimentary for WICPA members.
Registration is required to attend.
