42 minute read
The Washington CPA 2021 Fall
LEADERSHIP LENS
Advice to Future and New CPAs
Tom Sulewski
Fall is here and another year end marches toward us with each setting sun. With the change in seasons, we see schools reopening and students heading back to campus to re-engage in their education journey. As many firms likely do, we recently had a sendoff event for our departing summer interns which is an event I always enjoy.
& Summer BBQs
A portion of our program was dedicated to lessons learned and experience sharing from the new interns and then some additional time was reserved for the senior partners to reflect on their own words of advice to the future leaders of the profession.
The dialogue between the generations provided a variety of rich perspectives with the following takeaways for me:
Create a Legacy – As senior leaders in our firms and in the community, there can be no greater legacy than the transfer of our collective knowledge to the next generation in our firms. It was powerful to watch the senior partners speak and the interns listen. As leaders, however, we need to be at peace that the next generation will hear and absorb but may not duplicate our advice exactly as we would have. If we do our jobs right, they will take the foundational knowledge we share and make it their own with an even more rewarding result than we could have imagined.
Build for the Youth – Our next several classes of interns will be approaching their career priorities with an entirely different life experience than many of the current leadership group. They
will have been toughened and stretched by a global pandemic that has changed their perspectives and priorities. We should not lose sight of the reality that those same perspectives and priorities of our new employees will be representative of our future clients. Invite those new perspectives to the table so we can learn how to better serve in the post pandemic environment.
Variety and Mentoring Wins – Almost without exception, each intern spoke about variety. They were motivated by a variety of different projects and responsibilities. And, they valued the people and mentors they had the opportunity with which to work. As leaders in a competitive employment market we need to keep speaking to the variety of projects and career opportunities the profession can provide. And, we need to do it every chance we can get in the office, in the classrooms, and at events.
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LEADERSHIP LENS
Say Yes More Often – Our senior advisors encouraged the interns to embrace the opportunities of the CPA profession and to experience as much as they can as soon as they are ready. Some of the most significant personal wins, knowledge growth and expansion of skills come when we simply say “yes” to trying something new. Complacency is the enemy of advancement and taking on the harder project and saying “yes” to new opportunities will differentiate the great from the good.
Small Actions Have Big Impacts – Throughout my career I have benefited from some relatively short actions taken by others that have resulted in big impacts in how I personally approached problems, projects and people. Our interns shared several similar personal stories from their summer work. We cannot underestimate the impact of the short, informal “thank you”, the meeting in our office to acknowledge successful execution of an assignment, or taking the time to show an intern or new staff the bigger picture of how their work impacted the value added results to a larger client project. As brief as those moments may be for us, they can completely change the outlook and trajectory of someone’s career path.
Good Days and Bad Days – Client service is at the core of our professional business model. That inherently translates to somewhat unavoidable work stress surrounding deadlines,
deliverables, and multitasking. Organizations that can deploy the emotional intelligence skills from a leadership level to empathize with their team and provide perspective can overcome those inherent stress drivers. A partner once told me to pace myself in this profession as it is more like a marathon than a sprint. There will be good days and bad days—and sometimes all in the same day.
Regardless of where you are in your career, you, too, have a unique perspective to share with future CPAs and even with your fellow members. WSCPA resource groups are a great way for you to share that perspective or get advice from peers. If you haven’t joined a group, visit Connect, our private member community, at www.wscpa.org/connect and search for a group to join. If you need help, reach out to memberservices@wscpa. org and someone will help you find a group.
Tom Sulewski, CPA, is the shareholder incharge of the audit department for ClarkNuber PS and WSCPA Chair. You can contacthim at tsulewski@clarknuber.com.
Illustration: © iStock/DrAfter123
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DIVERSITY, EQUITY, & INCLUSION
Advancing Diversity, Equity & Inclusion:
An Introductory Guide
Throughout the history of the United States, one’s ability to lead a safe and successful life has all too often been determined in large part by aspects of who they are — often ones over which a person has little or no control. These aspects include race, gender and sexual identity, culture, and presence of a disability among others.
Committing to the advancement of diversity, equity, and inclusion at your organization carries many benefits. First and foremost, it improves the ability of all people to live a dignified and happy life. Additionally, such a commitment weakens the systems that enforce quality of life disparities among people facing barriers in our society. Finally, our businesses, nonprofits, and organizations are stronger, more effective, and more adaptable when they embrace the voices of people they have historically ignored.
Like any successful initiative, advancing diversity, equity, and inclusion at your organization requires two things: self-assessment and measurable goals. This guide will help you begin the process of identifying opportunities for improvement at your organization.
STEP 1: ANALYZE YOUR ORGANIZATION’S CURRENT STATE
You must know where you are starting in order to figure out how to improve. A holistic examination of your organization’s policies, practices, and systems is best. However, it may make more sense for your organization to identify areas of high impact like hiring, advancement, and compensation outcomes.
Start by gathering and analyzing disaggregated data. How much do Black employees earn in your organization compared to their white counterparts? How many women are promoted to upper management? Once you discover systems at your organization that are producing disparate outcomes, you can take a closer look at those systems, identify the root cause(s), and propose changes to increase equity at your organization. Seek to answer questions like: “How is compensation being determined, and what factors of that system are working against a group or groups?”
Throughout this process, it is critical for your organization to involve people who belong to the affected communities. If your aim is to understand how to increase the number of women in upper management, it is crucial that women participate in the advancement system’s root cause analysis and lead the solution-finding process.
STEP 2: SET “SMART” GOALS
Once you’ve identified your organization’s areas of improvement, set specific, measurable, attainable, relevant, and time-bound (SMART) goals. It is a good idea to organize these goals into categories that make sense for your organization. We’ve provided a sample list of goals organized around business functions on page 12-13. Use these goals to kick-start your organizational analysis and modify any that could apply to your organization to fit the SMART framework based on that analysis.
STEP 3: EXECUTE AND REVIEW
With your goals set, it is time to execute. Make sure the initiative has a clear owner who will be responsible for seeing through your planned changes. This may be one or more individuals, and the SMART nature of the goals you set will define the expectations and conditions for success. After a period of time, make sure you review disaggregated data in the areas you are attempting to improve to gauge the effectiveness of your organization’s changes.
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DIVERSITY, EQUITY, & INCLUSION
SAMPLE GOALS FRAMEWORK
Use the framework below as a starting point for your analysis, with sample goals that may be adapted into SMART goals that make sense for your organization.
Diversity & Inclusion Framework
BUSINESS AREA OPPORTUNITIES SAMPLE GOALS
Human Resources & Company Culture
Outward Communication/PR
• Complete a D&I toolkit and evaluation metrics to establish baselines
• Monitor/review development plans through a DEI lens
• Review the employee handbook through a DEI lens and update accordingly
• Provide DEI training for staff
• Revise communications to eliminate biased language
• Ask senior representatives of company to be visible champions of your D&I program
• Review charitable giving organizations that align with company goals/mission
• Review and update or create communication guidelines for identifying potentially biased language
• Review marketing policies through a DEI lens and update accordingly
• Review customer-facing technology/ experiences for accessibility
• Implement publication goals for inclusion of diverse audiences in published content, artwork, social media, and internet usage
• Find opportunities to engage with external events or groups
• Make plans for how company will engage with external awareness days such as Pride, International Women’s Day, Black History month and more
• Complete AICPA’s Diversity and Inclusion Assessment toolkit
• Sign the CEO Action pledge and/ or The Valuable 500 and share commitment with staff
• Review compensation to ensure fair and equal pay for positions
• Create a diversity council/advisory board or consider employee resource groups (ERGs) to foster community and open dialogue
• Implement requirement for all managers to attend diversity and inclusion training annually
• Commit to investing meaningful donations or resources in D&I causes
• Commit company/staff resources to volunteer or pro-bono work in underserved communities or in racial equity initiatives
• Advocate at federal, state, and local levels for policies to address the equity gap, or to advance laws that protect against discrimination
Recruiting & Hiring Practices
• Connect with colleges and recruiting staff to support/expand DEI initiatives related to on-campus recruiting
• Create a diversity leadership group and host meetings to share best practices and resources
• Find opportunities to invest in diversified talent pipelines such as internship programs, mentoring, and partnerships with other organizations
• Restructure staff referral policies to incentivize diverse referrals
• Create policies for diverse slates and interview panels for hiring management roles and increased pool of qualified diverse candidates for promotions
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DIVERSITY, EQUITY, & INCLUSION
BUSINESS AREA OPPORTUNITIES SAMPLE GOALS
Advancement and Recognition
• Review performance evaluation processes through a DEI lens and update accordingly
• Review management and executive promotion processes through a DEI lens and update accordingly
• Create a mentorship or sponsorship program or employee resource group (ERG) designed to support, promote and celebrate diverse groups of employees
• Publish all race/ethnicity data by department on career site, internally and with stakeholders
• Create a program focused on investing in future leaders with increased mentoring/sponsorship for diverse groups that have typically lacked this support
Vendors
• Review and update vendor contracts/ contacts for bias
• Review guidelines for partnering with other organizations
• Advocate for increased DEI from current vendors
• Ask suppliers to complete a vendor workplace diversity survey to get baseline data and metrics
• Invest in diverse suppliers, products and marketing
FURTHER READING
Advancing diversity, equity, and inclusion is a broad subject, and a full examination of it is beyond the scope of this guide. To learn more, consider studying the following resources available in the Diversity and Inclusion Resource Group on WSCPA Connect at wscpa.org/connect-dei.
• 10 Tools for Eliminating Racial Bias
• Annie E. Casey Foundation’s Race Equity and Inclusion Action Guide
• Journal of Accountancy article “Assessment is key to a successful D&I effort”
• Journal of Accountancy article “What we can do to increase the number of Black CPAs”
• Ibram X. Kendi’s How To Be An Antiracist
• Tiffany Jana and Ashley Diaz Mejias’s Erasing Institutional Bias
• Verna Myers’s What If I Say the Wrong Thing?: 25 Habits for Culturally Effective People
For concrete examples of what some companies are doing see below:
• Glassdoor’s article “12 Companies Ramping Up Their Diversity & Inclusion Efforts”
• Ongig’s article “25+ Examples of Awesome Diversity Goals”
Here are some tools that may help you in your DEI initiatives:
• AICPA Private Companies Practice Section Diversity and Inclusion Toolkit
• CEO Action Diversity Pledge
• The Valuable 500 Action Pledge & Resources
• Surveymonkey’s Vendor Diversity Survey & Guide
• AICPA 2021 Diversity Holidays/Celebration List
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MEMBERSHIP
As I sit down to write this, my son is finishing his first week of in-person full-time learning since March 2020. As I reflect on the week, I am tempted to tell myself that things are moving in the right direction, toward normal even. Still, so many of the rules, regulations, and new routines we must observe are far from normal. There is certainly no shortage of things to keep parents up at night. Work and businesses are experiencing similar growing pains. Business-as-usual still means new rules and protocols while also dealing with economic uncertainty, safety concerns, supply chain shortages and perhaps most impactfully, staffing shortages. In the U.S., accounting and finance roles ranked fifth out of 10 jobs that are hardest to fill. When chatting with CPAs at our first live networking event this year, it was clear this was one of the top things keeping our members up at night, too.
While accounting firms know they are not alone in the struggle to find talent, it doesn’t take the sting away from the realities of competing for top talent, juggling workloads and balancing the pros and cons of remote work on your bottom line.
The WSCPA is currently embarking on a listening tour to continue to try to understand challenges of our members working in the finance sector and of firms who are dealing with the challenges of staff shortages. We know that several things are creating and compounding staffing shortages:
Illustration: © iStock/Elena Shlyapnikova
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MEMBERSHIP
Continued Decrease of Accounting Graduates The number of new graduating accountants and CPAs still lags behind baby boomer retirement numbers. While accounting graduate shortages were trending downward before the pandemic, COVID-19 has not improved the situation. WSCPA and the Washington CPA Foundation are still strongly committed to our pipeline initiatives to support more future CPAs. In addition to scholarship support for students entering their junior year through fifth year, we are increasing master’s degree scholarship awards from $8,000 to $10,000 per student. Research has found that students who earn a master’s degree versus completing a fifth year are more successful in passing the CPA exam. Additionally, the Foundation is expanding its scholarship awards to students with an interest in accounting at the college freshman and sophomore level and will award scholarships to students working on two-year transfer degrees at community colleges or four-year schools. By capturing students earlier in the pipeline, we know we can continue to support their growth into this profession and connect them to our community earlier.
Persistent Skill Gaps Required skills in the accounting profession are different than they used to be, and the skills continue to change quickly as technologies evolve. Many public accounting firms are reporting that the skills of college graduates still don’t match the realities of the roles they are filling. CPA Evolution is looking to address that and to update the CPA exam to better align with those industry needs. WSCPA is continuing to focus on the legislative alignments necessary to help move CPA Evolution to its launch of the new Uniform CPA Exam in January 2024. WSCPA held a Small Firm Issues Forum in September to discuss today’s challenging labor environment and better understand how the WSCPA might be able to work with our firms to help address skill gaps. Firms that are focused on talent retention through investing in upskilling their employees are seeing improvement in their talent retention. An ACCA report cited that 49 percent of Gen Zers ranked “opportunities to continually acquire new capabilities/learning” as one of their top five attractions for employment. Investing in WSCPA membership for your staff is still one easy way to continue to contribute to staff upskilling
through education, leadership opportunities, and increased network and communication skills.
Technology Staffing shortages mean that everyone is trying to do more with less. Investments in technology infrastructure for smalland medium-sized businesses are allowing for increased accounting automation and efficiency. WSCPA launched our Spark Technology Conference last year to focus on new software and technology enabling better collaboration and communication between staff and clients, and technology continues to be a strong focus in our conference lineup this fall. Consider taking advantage of one of these learning opportunities:
• Pacific Tax Institute Conference (October 21-22)
• Not-for-Profit & Health Care Conference (November 17-18)
• Spark Technology Conference (December 8-9)
In addition to our listening tour with firms, we are seeking feedback from unemployed members who are currently looking for full- or part-time work or plan to within the next six months. As WSCPA looks at developing programs to bridge our members with work opportunities, we would love to have your input. Please consider sharing your experience in our short survey at wscpa.org/work-survey or by scanning the QR code to the right.
As is said of parenting, and very much at the core of returning students back to school safely, it takes a village. In the same way, we know that there is not one solution or organization that can address all the challenges our professional community is facing right now. The WSCPA is continuing to listen and find ways to support you, and we know that we are stronger together. Hopefully, we can all get a few more nights of restful z’s in the process.
Monette Anderson is the WSCPA Director of Membership. You can contact her at manderson@wscpa.org.
www.wscpa.org The Washington CPA Fall 202115
PRACTICE MANAGEMENT
Illustration: © iStock/Andrei Ermakov
Complex workloads, staffing and work/life balance, the next pandemic surge, engaging and encouraging your team, pivoting for increased profitability …
Are You Ready for the 2022 Busy Season?
Donny C. Shimamoto
Before we know it, the next tax season or next crunch time will be here, if it ever in fact left. If COVID-19 taught CPAs anything, it’s that planning ahead can be priceless, especially when the world is thrust into lockdown.
Think about all the technical solutions that suddenly surged in usage when meeting in person was no longer an option.
An April 2021 report from Statista stated 17 percent of U.S. employees worked from home five days or more per week before COVID-19, a number that surged during the pandemic to as much as 70 percent in April 2020, according to Gallup, before leveling out at 58 percent in September for four months and dropping to 56 percent in January 2021. The number has dropped every month since, but the Delta variant threatens to halt the decline.
So what can your firm do to be ready for the 2022 busy season? Here are a few ideas from experts: 1. Invest in accounting automation to reduce workloads. 2. Identify areas to leverage outsourcing vendors to reduce staffing needs. 3. Refine technology-based collaboration methods. 4. Utilize employee engagement software to help improve team performance.
Invest in accounting automation to reduce workloads.
Everyone talks about artificial intelligence (AI) like it’s a thing coming in the future, but in reality, there are many accounting tools that already leverage AI. These tools can help with tasks like:
• Evaluating the completeness of transactions as part of month-end close processes;
• Identifying anomalous transactions or transactions that vary from expected parameters;
• Identifying potentially fraudulent transactions using risk indicators;
• Extracting data from a document and inputting it into a system; and
• Automating routine transaction processing based on bank feeds or other source data.
And where AI or an integration doesn’t fill the gap, you can use Robotic Process Automation (RPA) tools to help extract data, move data between systems, or perform other routine tasks. There are a few RPA tools that have made creating accounting “bots” as easy as recording a macro in Excel.
Identify areas to leverage outsourcing vendors to reduce staffing needs.
One of the larger issues our profession is facing is scarcity of qualified staff. Technology can help to reduce the workload, but we still need people to talk with clients and perform higher-level activities like analytics and problem solving.
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Outsourcing can help to address the staffing crunch. Lower-level tasks can be outsourced either onshore or offshore, freeing up your team to work more with clients or to do higher-value tasks.
Historically, offshore resources were seen as not very competent. However, with many large accounting firms (including all the Big 4) having offshore offices now, offshore outsourcing vendors are luring well-trained staff away from these big firms to work for smaller firms where they can have an increased variety of work. So, if you’re working with the right outsourcing vendor, you can get some highly qualified staff for less than half of an American entry level staff’s salary.
Refine technology-based collaboration methods.
Whether your team is in-office, hybrid, all remote, or offshore, technology collaboration tools have greatly improved in functionality and ease of use. In our accounting space, these vary from client portals, workflow management software, or even general technologies like Microsoft Teams.
Because you can’t manage by walking around anymore, you need to adopt better collaboration tools that enable you to not just meet with people remotely, but also see what work has been assigned to them, their progress on the work, and what they’ve completed. A good workflow tool will also help you to see where bottlenecks are – enabling you to proactively reassign work to meet deadlines.
Utilize employee engagement software to help improve team performance.
In the end, though, if the pandemic has taught us anything, it’s that people really are our most important asset. Turnover can cost thousands in recruitment, training, and lost time. That’s if you can even find someone who wants to work for your firm. Change is also hard for everyone, and all the items above involve enacting change. Luckily, employee engagement software has come to the fore to help you keep a better pulse on your teams and drive improved performance. This software helps you track how your team is feeling, enables you to remotely express gratitude to team members, and allows you to see which team members are thanking others. They can also provide a structured way to manage and provide regular feedback to both in-office and remote team members.
Donny Shimamoto, CPA.CITP, CGMA, is the Founder and Managing Director of IntrapriseTechKnowlogies LLC, an advisory-focused CPA firm specializing in innovation acceleration and organizational development for small businesses, middle market organizations, and nonprofits. Donny is a recognized thought leader and educator in the fields of accounting technology, IT risk management, and performance management.
His dedication to helping accountants and organizations strategically leverage technology while proactively managing their business and technical risk is paramount. He can be reached at 628-222-3511 or donny@intraprise.us. This article first appeared in Connecticut CPA magazine.
Join Donny Shimamoto for the WSCPA Spark Technology Conference, December 8-9, where he will be sharing cybersecurity tips.
Learn more about the conference at WSCPA.ORG/SPARK-21.
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PROFESSIONAL DEVELOPMENT
Become a Better Virtual Communicator:
An Infographic Guide
CREATE PROTOCOLS AROUND COMMUNICATION CHANNELS
agree upon response times
Establish an expected response time for each specific channel.
move specific types of communication to specific channels
Should requests be made through email? Quick questions in chat? Project updates in a project management system?
use @names to cut through channel clutter
Ensure your message gets to the right person in communication channels that have multiple people.
Women with child-care needs are
32% less likely
to leave their job if they can work remotely
74%
of professionals believe remote work will become the new normal
share your status
(Available, Offline, Do Not Disturb, Busy, In a Meeting) Sync your communication tools with your calendar for automatic status setting.
set expectations for virtual meetings
Is video required? Should participants use headphones? Will someone need to share their screen?
61%
of professionals would prefer a fully remote position
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PROFESSIONAL DEVELOPMENT
75%
of employees working remotely report being able to maintain or improve productivity on their individual tasks
Over 70% of managers said they are more open to flexible models for their teams than they were before the pandemic
VIRTUAL COMMUNICATION BEST PRACTICES
be clear and straightforward
Need something by a specific day or time? Want an “item received” confirmation response?
Make it clear in your messaging.
keep everyone in the loop
Keep your team aware of everyone’s work and project progess. Regular communication allows you to offer assistance, provide feedback, or to correct a problem as soon as it emerges.
provide adequate feedback
Be intentional about making sure feedback gets to coworkers and messages are received in the intended manner.
MUST-HAVE TECHNOLOGIES FOR REMOTE COLLABORATION
Communication Channels
•Zoom •Slack •Microsoft Teams •Google Hangouts •Email
Project Management
•Asana •Trello •Monday.com •Zoho Projects •Smartsheet
Visual Collaboration
•Miro •Mural •Conceptboard
Password Management
•LastPass •Bitwarden •1Password •Keeper
Cloud Document Storage & Editing
•Office 365 •Google Drive •Dropbox
For more tips on improving workplace productivity and to learn how to take advantage of all that today's technology can offer, join us for the Spark Technology Conference, December 8-9.
Learn more at wscpa.org/spark-21
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PROFESSIONAL DEVELOPMENT
SYNCHRONOUS VS. ASYNCHRONOUS COMMUNICATION
synchronous communication
Communication in real-time with immediate responses.
•socializing •complex discussions •meetings •retreats •emergencies
Too much synchronous communication = team burnout and less time for deep work
asynchronous communication
Communication happens over a period of time. Responses occur intermittently.
•announcements •gathering feedback •project discussions •weekly/monthly updates •project planning/collaboration
Too much asynchronous communication = team members become detached and feel isolated
KEY TO A HIGH-OUTPUT REMOTE TEAM: Mostly asynchronous communication with opportunities for synchronous connection
effective strategies for synchronous communication
Plan in advance
Try to limit impromptu video calls and phone calls.
Use in moderation
Focus on fewer communications with only those who are essential to the conversation.
Use respectfully
Be aware of time differences when scheduling meetings with attendees in multiple time zones.
Capture synchronous meetings
Record key video calls and share them with those who cannot attend.
Maximize video and audio quality
Connect Wi-Fi and test your technology in advance of calls.
effective strategies for asynchronous communication
Set timing expectations
When beginning the communication share a timeframe for responding and a due date.
Logical organization
To be effective, asynchronous communication should be organized and accessible by all team members. Establish and use a company-wide system for organization and naming conventions.
Overcommunication
Asynchronous communication must be detailed and clear to prevent delays introduced by back-and-forth exchanges. Overcommunicate and be very detailed in responses.
DRIs and decision makers
Keep asynchronous discussions on track by including decision makers and DRIs (Directly Responsible Individuals). They can wrap up conversations and help with decision-making once sufficient feedback has been shared.
Default to transparency
Aim for most remote team conversations to be in public where all can see. This helps the team make progress when someone is away.
https://www.catalyst.org/reports/remote-work-burnout-productivity/https://www.growmotely.com/future-of-work
SOURCES:
https://www.bcg.com/publications/2020/valuable-productivity-gains-covid-19
https://twist.com/remote-work-guides/remote-team-communication#effective-strategies-for-asynchronous-communication
IN PARTNERSHIP WITH:
Illustration: © iStock/SophonK Icons: © iStock/Momento Design
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ACCOUNTING PRACTICE MANAGEMENT
Paving the Way:
A Framework for Smooth CPA Leader Retirements
Lisa Downs
A key statistic from the most recent Rosenburg Practice Management Survey is that 60-72 percent of partners in CPA firms are over age 50. With the aging of the accounting profession coupled with the projection that all of those in the baby boomer generation will be age 65+ by 2030, there’s no better time to support your soon-to-be-exiting leaders with a post-exit plan than now.
According to the report “The Four Pillars of the New Retirement: What a Difference a Year Makes” by Edward Jones, Age Wave, and The Harris Poll, 77 percent of those planning to retire wish there were more resources available to help them plan beyond just their finances.
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ACCOUNTING PRACTICE MANAGEMENT
Retirement is one of the biggest emotional, psychological, and mental transitions in our lives, yet little attention is given to it beyond financial and estate planning. For many whose identity is closely tied to work, it can be something to dread, creating a whole host of issues, not the least of which is going into a potential downward health spiral post-exit.
If your firm or company is one where the extent of supporting employee retirements is the annual visit by your employer-sponsored retirement plan representative to talk about investments, along with a “bon voyage” party, it may be time for a different approach to support those on the verge of retiring while also developing your rising stars.
A Matter of Identity
For some, retirement is something to look forward to as a next exciting chapter in life, or a continuation of life as they know it. For others, though, it can be viewed as a time of chaos or a long,
slow march toward the inevitable end. According to the theory of role centrality, popularized by author and researcher B.J. Biddle and others, the more positive view we have of our profession upon entry, the more negative view we have of leaving it behind (high role centrality). Or, contrarily, if we’re not that closely tied to our careers when we start working, the easier our transition to retirement will be (low role centrality).
When the first words out of someone’s mouth in response to the question, “What do you do?” is about work, that’s a good sign that there’s high role centrality in play, potentially leading to a tougher time transitioning to retirement. If life has been work and work has been life, the thought of leaving the firm or company, not to mention clients, behind can strike fear in the hardiest of hearts. No wonder many leaders still come into the office when they’ve got one foot out the door, hesitant to leave completely. If not this in their lives, then what?
Benefits of Developing Retiring Leaders
Why bother investing in the career development of those who will be exiting soon? For a number of reasons, including that it:
• Creates “raving fans” of alumni who can spread the word to recruit talent for your firm or company as a “best place to work”;
• Lessens any struggle and awkwardness of the exit process;
• Lends itself to help with succession planning, younger talent development, and knowledge and client transfer;
• Allows people to exit smoothly sooner, knowing they have goals and a plan post-exit, freeing up positions, office space, resources and equipment;
• Serves as part of your staff and leadership well-being, development, or engagement programs.
This then begs the question, “How can we do this, especially if resources are limited?” By following a framework that sets you up for success.
End-to-End Talent Development Framework
To provide a gradual “off ramp” for your exiting leaders, consider how they can wear different “hats” beginning three to five years out from their exit to in turn support the growth and career development of up-and-coming talent. These roles can be focused on mentoring and knowledge transfer, playing the role of advocate for high-potential leaders, and serving as a trainer, a peer group member with fellow older workers, and an advisor to junior staff and the organization.
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ACCOUNTING PRACTICE MANAGEMENT
The table below illustrates various potential activities and timing within this framework.
3-5 Years Out 1-2 Years Out 6 Months-Exit
Mentor & Info. Sharer:
• Formal or informal mentoring
• Introductions/networking support for staff
• Host of roundtable events with staff
• Host of job shadows or rotational assignments
• Input on succession planning
• Project sponsor
• Presenter
• Content contributor
Advocate & Trainer:
• Serve as trainer
• Champion of specific staff to move into leadership roles
• Continued input on succession planning
• Group coaching participant with fellow senior leaders re: retirement planning
• Pre-exit 1:1 coaching with action plan; goals for post-exit
Peer & Advisor:
• Continuing as a group coaching participant with fellow senior leaders re: retirement planning
• Post-exit action plan refinement with coach
• Client/customer transition work (could also start 1-2 years out from exit)
• Informal advisor for junior leaders as needed
Rather than having clogged talent pipelines with younger staff possibly leaving out of frustration with nowhere to go and older leaders potentially being fearful of leaving due to an anticipated loss of routine, purpose, and identity, paving the way for both groups can make life easier for all.
Notice that most of the above activities cost nothing but making time for them with a bit of structure put in place unless you choose to bring in an external coach or consultant.
Key Questions to Support Retiring Leaders
Additionally, here are a few questions you can ask yourself or pose to your team as you begin to design your strategy to support those close to exit:
• What can you provide to help them both plan for their time post-exit and remove fear of it through meaningful goals?
• How can they contribute to the firm or company pre-exit in a way that adds value and develops your talent pool?
• What information about services and life planning resources post-exit can you make available in a way that’s respectful?
• What’s possible in terms of a gradual exit process so it’s not as scary of a prospect for your retiring leaders?
• What’s a mechanism you can put in place, if one doesn’t already exist, to know when people may exit the firm or company to inform implementing a framework?
The answers to these questions may lead to a need for research and additional leg work, though once solidified, can go a long way toward putting your organization on a path to truly being an employer of choice and an advocate for all, regardless of age, throughout the entire employee lifecycle. As humans, we don’t stop learning until or unless we choose to stop or brain health issues interfere, so focusing career development efforts only until employees reach a certain level in the organization may do more harm than good in the long run, especially if the exit process is painful for all concerned.
It’s critical that we support not only younger and mid-career staff, but also those who are on the verge of retiring so they can create a vision of their life in retirement, craft a “new identity” beyond their current work, and feel confident in having a plan for how they’ll spend their days, allowing them to move on as needed. It can be a small price to pay for all they’ve given throughout their careers and probably much more meaningful than the proverbial gold watch.
Lisa Downs is President of New Aspect Coaching andhost of Reigniting You… with Lisa Downs, a podcastoffering career transition support for professionals. Youcan contact her at lisa@yournewaspect.com.Illustration: © iStock/Rudzhan Nagiev
24 The Washington CPA Fall 2021 www.wscpa.org
ADVOCACY
The Seasons and Laws are Changing
Mike Nelson
Illustration: © iStock/Svetlana Borovkova
While the profession continues to adapt to the changing business and social climate, the WSCPA Advocacy Team has spent the summer and fall working hard monitoring and participating in various rulemaking at different agencies which will impact the profession in the years to come. This work affects not only how CPAs maintain, and future CPAs obtain, their licenses but also the laws that CPAs need to consider when advising clients or their employers.
Preparing for changes to CPA exam, hearings The Washington State Board of Accountancy (WBOA) has started the rulemaking process for two areas. The first would remove specific named references to sections of the CPA exam as well as a set number of sections within the exam. This will prepare Washington for the new CPA exam that will be rolled out in 2024 as well as make our laws flexible for any other changes to the exam in the future. The second rule they are actively working on affects the formal and brief adjudication proceedings licensed CPAs may have before the WBOA. There is still work to be done before they finalize language on this rule, but the intention is to make the administrative aspects of these hearings more efficient for the licensees involved and the Board members.
DOR and the capital gains tax The team has also been monitoring and meeting with the Department of Revenue (DOR) on a number of rule changes they are proposing and reviewing for both new and existing tax laws. Most notably, WSCPA and several of our members were asked to participate in an ongoing series of meetings with the DOR around the newly passed capital gains tax and areas of ambiguity or issues within the new law that may need to be addressed with rulemaking. These talks are ongoing, and the formal rulemaking process has not been set (as of mid-September). DOR has not been issuing guidance on specific circumstances or fact patterns within the new law yet. However, if you or a client would like
a tax ruling around the capital gains tax (or any other existing tax), you can send an email to rulings@dor.wa.gov and need not identify the specific client.
CPA-inactive In addition to this work around rulemaking, the Advocacy Team has continued to work with the WBOA and others on the legislation we are planning to introduce next Legislative Session that would add a new license status titled “CPA-inactive.” This piece of legislation will set a timeline to finish the phaseout of certificates that had been started in 2001 when the last certificate was granted by WBOA. Current certificate holders who have not completed the experience requirements to become active CPAs will be moved to this new inactive status in July of 2024. Under this new status, the roughly 700 current certificate holders will retain the ability to conduct the same functions that they have legally been permitted to do with the certificate. The new status, however, will also give another option to CPA licensees who may prefer to step back from their active status without retiring or letting their license “lapse,” which are the only two current options. This will also bring Washington into parity with other states that do not have certificates and also have the CPA-inactive license status, and further relieve confusion related to mobility.
If you have any questions or would like to get more involved with the Advocacy Team and shape the future of the profession, please feel free to reach out to us and we can find ways for you to participate moving forward.
Mike Nelson is the WSCPA Manager of Government Affairs.You can contact him at mnelson@wscpa.org.
www.wscpa.org The Washington CPA Fall 202131
NON-PROFIT LEGISLATION
Washington’s New Nonprofit Corporation Act:
Is Your Nonprofit Ready?
In May, Governor Inslee signed into law an all-new Washington Nonprofit Corporation Act (New Act). The New Act will completely replace the current Washington Nonprofit Corporation Act, which has seen only minor updates since its adoption in 1967.
Nearly all of the New Act's provisions will take effect January 1, 2022.
While the New Act makes changes to many different aspects of Washington nonprofit corporate law, it makes major, overarching changes in three areas:
• Modernization: Many provisions of the current Act are out-of-date or do not reflect currently recommended practices in nonprofit governance. The New Act modernizes those provisions.
• Charitable Assets Held by Nonprofit Corporations: The New Act adds a new set of provisions intended to protect charitable assets held by nonprofit corporations. Such assets are currently regulated under trust law in Washington, the application of which is not always straightforward in the context of nonprofit corporations.
• Membership Organizations: The New Act adds a comprehensive set of rules governing the relationship between membership nonprofits and their members, an area in which the current Act has skeletal provisions that often raise more questions than they answer.
36 The Washington CPA Fall 2021 www.wscpa.org
NON-PROFIT LEGISLATION
What It Means for Existing Nonprofits
Non-Membership Organizations Most Washington nonprofits that do not have members will not need to amend their governing documents (either articles of incorporation or bylaws) to be in compliance with the New Act when it takes effect. The New Act will nevertheless present opportunities to many nonprofits to streamline and improve their governance if they wish to do so.
Some of those opportunities are described more completely below. Nonprofits may wish to have legal counsel review their articles of incorporation and bylaws to ensure that they are compliant with the New Act and positioned well to take advantage of its improvements.
Membership Organizations Nonprofits that have members may need to amend their documents to address new rules governing membership qualifications, powers, notices, meetings, and voting. The New Act also presents opportunities for many membership nonprofits to improve their membership structures.
Donor-Restricted Assets The New Act's rules governing use and management of charitable assets are significantly different from those found in Washington trust law. The new rules instead conform to Washington's Uniform Prudent Management of Institutional
Funds Act (UPMIFA, Chapter 24.55 RCW), which applies to all nonprofit corporations that hold charitable assets.
Nonprofits that hold assets subject to donor-imposed restrictions (such as endowments and assets subject to donor-imposed restrictions on use) should work with legal counsel to review their policies and procedures governing the use, investment, and management of those assets, to ensure compliance with the New Act.
Out-of-State Corporations Nonprofit corporations formed outside of Washington that operate within the state will likely face little change as a result of the New Act. The rules governing registration and operation of out-of-state nonprofit corporations do not change substantially in the New Act.
Key Provisions of the Act
While the New Act contains too many new and revised provisions to describe in a single advisory, some provisions are likely to have immediate real-world effects. We list some of those key provisions below.
Electronic Notices and Meetings The current Act has antiquated rules requiring members, directors, and officers to opt in affirmatively, in writing, before they may receive any email notices from the corporation. The New Act permits email notices by default, with an opt-out option in case a particular member, director, or officer does not want to receive them.
The New Act also clarifies that meetings of members, directors, or officers may be held either fully or partly online, unless the corporation's articles or bylaws expressly prohibit electronic participation in meetings. Online meetings may take place by videoconference, telephone, or in any other real-time medium through which participants may simultaneously understand one another. (This does not include asynchronous media such as email.)
Membership Corporations The current Act has only skeletal provisions concerning the relationship between a nonprofit corporation and its members. The New Act includes a comprehensive set of provisions on the topic including rules governing members' rights and duties, notices to members, membership meetings, voting by members, and inspection rights. It also expressly provides for delegates of members to carry out some of the members' duties, an organizational concept that is particularly common in religious organizations.
The New Act clarifies that members generally do not have fiduciary duties to the corporation and sets out complete procedures for membership voting by ballot. Because of the incomplete nature of current law in Washington governing membership, our experience suggests that many nonprofits have bylaws that will not comply in all respects with the New Act. Membership corporations should work with legal counsel to ensure that their governing documents are consistent with the New Act.
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NON-PROFIT LEGISLATION
Board of Directors
• Board Size: Organizations that are classified for federal tax purposes as Section 501(c)(3) organizations and as public charities are required under the New Act to have at least three directors on their boards. That rule is consistent with informal IRS policy regarding public charities. Section 501(c) (3) organizations that are classified as private foundations for federal tax purposes may continue to have one or two directors.
• Fiduciary Standards: The New Act clarifies that directors of charitable nonprofits have the traditional fiduciary duties of corporate directors rather than the substantially stricter duties that apply to trustees of a charity formed as a trust—and arguably to nonprofit directors as well, under some interpretations of current law. This change should reduce potential liability exposure for directors of charitable corporations and encourage service on boards. Finally, the New Act expressly allows organizations to have youth representation on their boards, subject to a number of specific conditions.
corporations to convert from for-profit to nonprofit status, or vice versa, without reincorporating if certain conditions are met and other applicable laws allow the conversion.
Transition Provisions On the effective date of January 1, 2022, all nonprofit corporations currently governed by Chapter 24.03 RCW will automatically be subject to the New Act. Other types of nonprofit corporations governed by other chapters of Title 24 RCW, including Chapter 24.06 miscellaneous corporations, will continue to be subject to existing law.
Corporations that have assets subject to donor restrictions on use or management may elect to use and manage their giftrestricted assets under current law (including current procedures for modification under charitable trust law) during a one-year grace period, ending on January 1, 2023, but will still be subject to the New Act in all other respects on January 1, 2022.
Supervision of Charitable Assets The New Act significantly revises the rules governing how organizations must handle charitable assets, including all assets held by Section 501(c)(3) organizations. The rules introduce new procedures for managing assets subject to donor restrictions that are designed for consistency with UPMIFA.
The New Act establishes specific procedures for modifying gift restrictions, preventing charitable assets from being distributed improperly, handling charitable assets in transactions such as mergers and dissolutions, and reporting certain major changes in a charitable organization's activities or purposes. It also provides new procedural guidance to the Attorney General's office with respect to investigations of potential misuse or mishandling of charitable assets.
"Fundamental Transactions" The New Act has all-new provisions governing so-called "fundamental transactions"—mergers, dissolutions, dispositions of assets, and other similar transactions. The new provisions are intended to guide nonprofits through the process of a fundamental transaction with more clarity, including especially how to treat charitable assets throughout the process.
The New Act also adds for the first time provisions expressly allowing corporations to "redomesticate," or change their state of incorporation if the other state allows such transactions as well. Finally, the New Act will allow
Conclusion
The New Act is the culmination of over a decade of work by a Washington State Bar Association committee, and also reflects extensive input from stakeholders across Washington's nonprofit sector as well as Washington's nonprofit regulators.
David Lawson is Counsel with Davis Wright TremaineLLP in Seattle. David became the recorder for the NewAct project in 2013 and is the primary drafter of manyprovisions, and other DWT attorneys provided significantinput. You can contact him at davidlawson@dwt.com.
Copyright Davis Wright Tremaine LLP. Reprinted with permission. Illustration: © iStock/ Rudzhan Nagiev
To learn more about topics affecting not-for-profit and health care organizations, join us for the Not-For-Profit & Health Care Conference on November 17-18. Learn More >
38 The Washington CPA Fall 2021 www.wscpa.org
