The Washington CPA 2023 Fall

THE

WASHINGTON CPA

Volume 67, Number 2

What's the Risk?

Updated quality management standards promote a risk-based approach to planning and performing group audits.

FALL 2023

Maximizing the Value of Your CPE Credits Neurodiversity in Accounting: A Career Match Utilizing ChatGPT as a Tax Assistance Tool: A Practical Guide

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THE WASHINGTON CPA

CONTENTS

FALL 2023

www.wscpa.org • memberservices@wscpa.org Tel 425.644.4800 170 120th Ave NE Ste E101 Bellevue, WA 98005

BOARD OF DIRECTORS Andrew Brajcich Chair Sarah Funk Vice Chair Ed Ramos Treasurer Writu Kakshapati Secretary Sara Bailey Immediate Past Chair Kimberly D. Scott President & CEO Richard Burger Mackey Norman Haugen Courtney Hirata Jamie Hueners Kelly Nelson

Ursula Perkins Bryce Rassilyer Liz Redmond Jillian Robison Joel Williams

CHAPTER BOARD CHAIRS Charles Meyerson Everett Area Marcie McAllister Everett Area TBD Seattle/Bellevue Area Kairi Roberts Spokane Area Nick Braun-Lopez Tacoma Area TBD Tri-Cities Area Canada Segura Yakima Area Wade Helms Yakima Area

MAGAZINE PRODUCTION Jeanette Kebede Editor Jennifer Johnson Art Direction The Washington CPA is published by the Washington Society of Certified Public Accountants for its members. Views and opinions appearing in this publication are not necessarily endorsed by the Washington Society of CPAs. The products and services advertised in The Washington CPA have not been reviewed or endorsed by the Washington Society of Certified Public Accountants, its board of directors, or staff.

The Washington CPA is published quarterly by the Washington Society of Certified Public Accountants, 170 120th Ave NE Ste E101, Bellevue, WA 98005. $12 of members’ annual dues goes toward a subscription to The Washington CPA. Periodicals postage paid at Bellevue, Washington and additional mailing offices.

Cover Graphics illustrations: © iStock/VectorHot, © iStock/Feodora Chiosea

POSTMASTER: Send address changes to The Washington CPA, c/o WSCPA, 170 120th Ave NE Ste E101, Bellevue, WA 98005.

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On the Cover Maximizing the Value of Your CPE Credits 12 Neurodiversity in Accounting: A Career Match 14 What's the Risk? 16 Utilizing ChatGPT as a Tax Assistance Tool: 20 A Practical Guide

Spotlights Compliance with the Federal Trade Commission 22 'Safeguards Rule' Talent Management Considerations 30 for Nonprofits

Departments Membership News 4 Leadership Lens 6 Washington CPA Foundation 8 Grants and Scholarships WSCPA Peak Firms 11 Upcoming CPE 24 Classified Ads 28 @WashingtonCPAs

The Washington CPA Fall 2023

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MEMBERSHIP NEWS

WSCPA Award Nominations Due December 31 Every year, the WSCPA honors individuals (and one company or firm) that have demonstrated their commitment to supporting the Society and maintaining the CPA's trusted and respected place in Washington State's professional community.

Do you know someone who fits this description? Nominate a superstar by December 31 at wscpa.org/nominate.

Call for Nominations: WSCPA Board of Directors The Board Governance Committee is now accepting nominations for the 2024-2025 Board of Directors. Do you know someone who has been involved with the WSCPA and whose leadership could contribute to the future of the organization? Nominate them to serve on the board!

To submit a nomination, contact Cara DiCostanzo, Executive Assistant and Governance Administrator, at cdicostanzo@wscpa.org. Nominations are due by October 31.

Have you met your 20-hour CPE Requirement for 2023?

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On January 1, 2020, new rules regarding CPE came into effect. One of the biggest changes is that individuals holding an active CPA license are now required to complete a minimum of 20 hours of CPE per year. This started in 2020 and is not retroactive. Active licensees still need to complete a total of 120 hours of CPE, including a Washington State Board of Accountancy approved ethics course, within their total reporting period, but should plan their CPE so they’re earning at least 20 hours each year.

The Washington CPA Fall 2023

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MEMBERSHIP NEWS

Verifyle and the WSCPA have partnered to offer all members access to Verifyle Pro™, Verifyle’s premium, ultra-secure online file sharing and messaging service (a $600 value) at no cost to WSCPA members.

Verifyle is an extremely simple-to-use cloud storage and sharing tool that offers: • The most powerful encryption technology available on the web (Cellucrypt®)—each individual item stored or shared in Verifyle is secured with six unique encryption keys • A polished and professional way to present yourself to existing and prospective clients, while keeping your communications private and secure • Digital signatures capability for requesting clients sign, date and initial documents inside Verifyle To take advantage of this free benefit: Sign up at verifyle.com/wscpa using the email on your WSCPA member account.

WSCPA Mailing List Policy Find a CPA - Free WSCPA Resource!

Enroll your firm in the Find a CPA directory! Help prospective clients find your firm through an easy, interactive, and searchable directory, at no charge to your organization.

Explore the directory at wscpa.org/find-a-cpa

The WSCPA does not sell member email or mailing addresses.

Members may occasionally receive mail from third-party partners that offer products or services deemed to provide value to members. To be excluded from these mailings, update your Communication Preferences online by clicking the "Update Preferences" link in any WSCPA email, or send a request to unsubscribe from third-party mailings to webmaster@wscpa.org.

WSCPA Knowledge Hub A Free Member Resource!

Visit and discover a library of free, downloadable content right at your fingertips. Includes white papers, webinars, product guides, case studies, industry analysis and much more, provided by experts and vendors within the accounting industry.

Check it out at hub.wscpa.org.

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It’s Past Time to Rethink Andrew Brajcich, CPA, JD, LLM In my role as chair of the WSCPA Board of Directors, I’ve been learning about professional issues on the national scene, particularly the CPA pipeline shortage. I am hopeful that after the Washington State Board of Accountancy (WBOA) meeting on October 20, our state will be well on its way to having the broadest window to pass all four sections of the CPA exam.

During its October rule-making meeting, the WBOA will be accepting public input on a rule change that would grant exam candidates 36 months to complete the CPA exam. The WBOA may take final action during this meeting as well. Expanding this window is one of many steps needed to reduce unnecessary barriers to entry into our profession and help with the CPA pipeline shortage.

is the 150-credit hour rule. Our fellow CPAs in Minnesota took a bold step in January of this year and offered an alternative pathway to the profession. The Minnesota Society of CPAs introduced legislation that provides for CPA licensure once candidates have earned 120 credit hours and have completed additional work experience. South Carolina soon followed suit.

This proposed legislation would not eliminate the 150-credit hour route to CPA, rather it offers an additional, alternative option—a pathway that is already offered to international candidates in some circumstances. Some of our finest professionals today were licensed with only 120 credit hours, including CLA CEO Jen Leary, who is among the increasing voices who are asking, “Why 150?”1

There are many barriers that may deter students from entering and remaining in the profession. The one I continually hear about, from our members and from articles and studies on the subject,

Arguments in favor of maintaining the status quo seem to be evolving. A position I hear often is that we are a learned profession (which we are) and the additional credits make us akin to the

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The Washington CPA Fall 2023

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illustrations: © iStock/Aleksandr Durnov, © iStock/Igor Maslennikov, photo: © iStock/mesh cube

LEADERSHIP LENS medical or legal professions. Yet those professions have very specific educational requirements, e.g., medical school, while CPA candidates can obtain their extra 30 credits in any subject.

Favorite classes among some of my students are not from the accounting or business department; they are scuba diving and bowling. While these classes may be beneficial for personal and even professional development, I fail to see the merit in requiring them for a future CPA, particularly given our current talent shortage. It’s also worth noting that the legal profession offers a pathway to practicing law without going to law school. In Washington, the Law Clerk Program combines work and study with an experienced lawyer or judge over a four-year period.

Clerks are then eligible to take the bar exam and become licensed as attorneys.

Similarly, for several years licensure has been under threat from both sides of the aisle in various statehouses.

Conservatives prefer deregulation and progressives want to increase access. Proponents of the 150-credit hour rule contend that more education protects us from these threats. If this threat remains, I think we need a better counterpoint than a requirement to take any 30 college credits regardless of whether they are related to accounting or business.

When Minnesota introduced their legislation, discussion quickly turned to substantial equivalence. If a state were to allow for licensure at 120-credit hours, CPA licenses from that state will no longer have substantial equivalence in other states.

This will mean CPAs licensed in that state would not be able to practice in other states. That’s scary. Especially given the remote work situations these days.

We as a profession define substantial equivalency. I think a lot of CPAs would admit they learned more on the job during their first few years than in their fifth year of college, even when they took

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more accounting coursework. For example, we as a profession can decide that CPAs with 120-credit hours and additional years of work experience are substantially equivalent to CPAs with 150-credit hours and less work experience. We’ve done it before with professionals like 120-credit hour CLA CEO Jen Leary when her license was grandparented in. We do it today with some professionals who were educated outside the US. The reality is that regulators in every jurisdiction need to agree, and statutes or rules will need to be changed.

There is seemingly more work to be done and fewer CPAs to do it. Firms are desperate. We’ve held meetings, and forums to address this issue, but none have addressed in a meaningful way what I see as the elephant in the room: the 150-hour self-inflicted wound. Larger firms are no longer turning to the proposed solutions, rather, they are turning to non-CPAs, both domestically and overseas, to get the job done. Smaller firms will someday do the same.

It’s time to seriously consider alternative pathways that can address the body of knowledge needed to succeed as a CPA and make the profession more attainable and desirable. It’s not the only step that needs to be taken, but I think it is an obvious one.

Chair of the WSCPA Board of Directors, Andrew Brajcich, CPA, JD. LLM, is the Jud Regis Endowed Chair of Accounting, Graduate Accounting Director, and Professor of Accounting at Gonzaga University. You can contact Andrew at brajcich@gonzaga.edu.

Reference 1. Leary, Jen. n.d. “Addressing the CPA Pipeline Issue Requires Collaboration and Bold Leadership.” www.linkedin.com. https://www.linkedin.com/pulse/ addressing-cpa-pipeline-issue-requires-collaboration-bold-jen-leary/.

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FOUNDATION GRANTS

Foundation to Grant up to $30,000 to Improve Diversity in CPA Pipeline Monette Anderson The Washington CPA Foundation is accepting applications for its 2024 grant program. This will be the seventh award cycle for the Washington CPA Foundation grant program, which aims to improve the diversity of the CPA pipeline in Washington. The Foundation intends to provide up to $30,000 in awards this year to organizations and programs that meet the following criteria: • • • •

Organization or program’s target group is students, high school to early college.

The goal is to increase underrepresented populations in the field of accounting.

Programs will be evaluated both on quality of the interaction and quantity of students reached.

Programs or events can be existing or new.

If you know a school or non-profit organization that may be a fit for this grant, please send them to www.wscpa.org/grant to find our grant application and important information about applying. Applications are due December 1, 2023.

To learn more about previous grant awards and recipients please reach out to me at manderson@wscpa.org.

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The Washington CPA Fall 2023

Monette Anderson, CAE, is WSCPA Vice President of Membership and Education and Executive Director of the Washington CPA Foundation. You can contact Monette at manderson@wscpa.org. photo: © iStock/simonkr

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FOUNDATION SCHOLARSHIPS

Charting Your Academic Path You could receive a $2,000 scholarship!

Applications are open to rising first- and second-year college students interested in the accounting profession.

Apply by April 14, 2024

WSCPA.ORG/CHART

Where can

o c u c n t Atake you? i n g Win a $5,000 Accounting Scholarship!

The Washington CPA Foundation is excited to be able to offer over $500,000 in scholarships for students in Washington State. Students entering junior year or higher in the fall of 2024, fifthyear, master's, and PhD candidates, as well as, community college transfers are encouraged to apply for this scholarship level.

AWARD AMOUNT $5,000 - $10,000* * $10,000 scholarships for master’s / PhD candidates

APPLICATION DEADLINE February 11, 2024

APPLY NOW!

BECOME A SCHOLARSHIP REVIEWER

WSCPA.ORG/CPASEAS

Help us give away over $500,000 in accounting scholarships!

TIME COMMITMENT 12-20 hours Scholarship applications are reviewed in your home or office through our secure, online portal with a provided scoring matrix and guidelines.

Contact Benjamin Warren at bwarren@wscpa.org

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PEAK FIRMS

WSCPA PEAK FIRMS The WSCPA Peak Firm program recognizes and awards special benefits to firms that sign up 100% of their eligible staff for WSCPA membership. Being a Peak Firm establishes you as a leader in the profession and provides an array of discounts and benefits.

Learn more and enroll your firm at wscpa.org/peak-enroll

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Kovarik & Kim PLLC

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CPE STRATEGY

From Have-to-Do to Glad-I-Did: Maximizing the Value of Your CPE Credits for Lifelong Learning Monette Anderson, CAE Every day, as 5 o'clock rolled around, I would glance out of my office window and see the freeway traffic piling up. The sea of brake lights always filled me with dread. I'd often find excuses to delay my departure—perhaps answering a few more emails or organizing my desk. That changed when my husband gave me an Audible subscription. Suddenly, my commute transformed from a dreaded chore into cherished "me time." Traffic was still there, but my perspective had shifted dramatically.

As we find ourselves in CPE crunch season, this scenario might feel relatable. Many CPAs are scrambling to fulfill their educational requirements, feeling the same sense of dread I used to associate with my commute. But what if we could shift our perspective? By reframing how we view CPE, we can unlock its true potential for lifelong learning and career growth. Here are some strategies to make your CPE journey more rewarding.

Select Courses Strategically Navigating the WSCPA catalog is not just about staying compliant or meeting requirements—it's about charting your professional development journey. With our searchable catalog, you can find courses that not only align with your career goals but also provide you with a balanced skill set that makes you indispensable in today's rapidly changing business environment.

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Before you dive into the catalog, take a moment to formulate a strategy. Consider these four key areas to focus on: •

Update in Current Practice Area: Staying updated in your existing specialization ensures you maintain a competitive edge.

•

Explore a New Practice Area: Don't hesitate to venture out into emerging sectors or diversify your skills, as it adds more arrows to your quiver.

•

Hot Topics: Keep an eye out for courses on trending issues in the industry. This will not only keep you informed but also make you more valuable to your organization.

•

Soft Skills: Never underestimate the power of leadership, communication, and emotional intelligence in your professional toolbox.

Once you've outlined your plan, use the handy tabs in our catalog to filter between Online CPE, In-Person Events, Special Events, and On-Demand options. This makes it easier to navigate to the courses that specifically align with your newly minted professional development plan.

And don't forget, for the most up-to-date industry trends and key "pop-up" CPE sessions, your WSCPA Present Value newsletter has you covered.

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CPE STRATEGY

Actively Engage During CPE Courses Being physically present and clicking through audience verification surveys can earn you the needed CPE credits, but active engagement enhances your retention of the subject matter and helps you make the best of your time and investment..

Avoid drifting off to your email or other distractions by engaging in activities like knitting, note-taking, or even walking on a pad while you listen. Joining in on chat discussions and asking questions can further enrich your experience.

Use CPE as a Team-Building Exercise CPE doesn't have to be a solo endeavor. Attending courses or conferences as a team can multiply the benefits. Team members can "divide and conquer," partaking in different sessions and later sharing their insights. This collective approach not only fortifies team cohesion but also enriches everyone's knowledge base.

Have multiple staff signing up for an online session? Instead of watching individually, you can organize an office watch party.

Reach out to our team, we’re happy to walk you through how to organize this and can provide you with the sign-in process to ensure your team remains compliant with education and that everyone receives their individual education credits.

You can also reach out to us about In-House CPE opportunities for your team.

Blend Learning & Networking at Conferences Networking at conferences offers a unique advantage. I remember welcoming people at one of our recent WSCPA conferences.

Almost immediately, a member spotted another member they knew to be an expert in a specific area. Without missing a beat, they sat down opposite them and began discussing a pressing tax issue. It was a vivid reminder of the transformative power of networking that conferences offer.

Leverage Follow-up for Long-term Retention Research suggests that revisiting content or key ideas a week or two after your initial learning can improve retention and understanding. Schedule a calendar reminder or a delayed email to yourself as a nudge to review these crucial concepts.

Our WSCPA fall conferences are particularly robust, providing a perfect blend of educational rigor and networking opportunities.

The knowledge-sharing that occurs in these settings is often transformative, offering real-time problem-solving and fostering collaborations that extend well beyond the event itself. Come and join us and reconnect with colleagues and meet new faces.

Just as an Audible subscription turned my dreaded commutes into enriching journeys, the right approach to CPE can turn a mandatory task into a career game-changer. This CPE crunch season let's pivot our perspective and see the road ahead as an opportunity, not a chore. Trust me, your career will thank you.

Monette Anderson, CAE, is WSCPA Vice President of Membership and Education and Executive Director of the Washington CPA Foundation. You can contact Monette at manderson@wscpa.org.

Illustrations: © iStock/Nadzeya_Dzivakova, © iStock/ Jenny On The Moon, © iStock/Petro Bevz, © iStock/ Galina Kamenskaya

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DIVERSITY, EQUITY & INCLUSION

illustrations: © iStock/Nadezhda Ivanova, © iStock/LysenkoAlexander, © iStock/Iryna Sklepovych

Neurodiversity in Accounting: A Career Match Neurodiverse employees are an untapped talent pool.

Tori Smith Diversity, equity and inclusion (DEI) efforts have swept the accounting nation and generally take the form of inclusiveness among different races, genders and abilities. Neurodiversity is another piece of the DEI pie.

The term “neurodiversity” was coined by Australian sociologist Judy Singer and is a synonym for all humanity, a category of intersectionality, and a civil rights movement for psychomedically labeled minorities and their allies. It does not mean neurologically disabled.

Judy argues that the entire population is neurodiverse because each person has a unique brain.

The term was first published in Singer’s 1998 sociology honors thesis at the University of Technology Sydney. A full version of the thesis is included in Singer’s new book, NeuroDiversity: The 1 Birth of an Idea.

According to Singer, the neurodiversity movement is an umbrella term that can include many interests of various psychomedically labeled minorities, including but not limited to attention-deficit/ hyperactivity disorder (ADHD), autism, tics, learning disabilities, speech, and others.

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Attracting Neurodiverse Candidates Given the current focus on DEI in the workplace, business leaders are educating themselves on neurodiversity and implementing neurodiverse-friendly practices within the hiring process.

Katie Brennan, an HR advisor from the Society for Human Resource Management (SHRM), said that since COVID-19, there has been a greater overall push for DEI efforts.

“It became a priority overall that included disability,” said Katie.

“There was value in a diverse workforce and seeing how a DEI program could retain talent.”

Although an obvious initiative for an organization is to partner with an organization that can walk them through the process of being neurodiverse-friendly, Katie said there are a few things that smaller organizations can do to be more inclusive.

“Smaller organizations can … post positions, partner with disability-related organizations, attend disability-related job fairs, include goals to attract individuals with disabilities, and consider simplifying job applications to make them more friendly,” she said. “The goals would be more of an internal goal. They might set goals to attract marginalized talent; it doesn’t have to be something necessarily that applicants would see.”

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DIVERSITY, EQUITY & INCLUSION 80% of the neurodiverse population are unemployed, despite being an untapped talent pool.

— Harvard Business Review

Some larger organizations have already adopted programs to accommodate the neurodiverse hiring population.

“Bigger companies have started programs in the last 10 years that tend to be tech and finance companies, companies that have repetitive tasks,” said Katie. “Those companies realized sooner than many others that there’s an untapped talent pool.”

required to accommodate them. It wouldn’t be anything that was a formal conversation.”

A 2020 UK study by the Institute of Leadership & Management found that 50% of the UK’s employers admitted they wouldn’t hire someone with a neurodivergent condition. Katie wants employers to make changes to hiring practices. “I hope to see more employers embracing it and making a great effort to attract neurodiverse talent throughout multiple mediums without sticking to their same talent strategy."

“The neurodivergent are highly unemployed. For most of us, regardless of cognitive differences, having a job gives us a sense of self-worth,” Katie said. “That’s undefinable.”

Several large companies that have neurodiversity-focused programs are EY, Deloitte, Dell, Ford, and JP Morgan. Colleges and universities are also jumping on board; the College of William and Mary has a program for neurodiverse students.

5 Ways to Support Neurodiversity at Work How can you be more accommodating to the neurodiverse? Here are five tips from the Journal of Accountancy:

While hiring a neurodiverse individual, the company may need to make accommodations so the employee can thrive. This includes, but is not limited to, allowing the employee to wear noise-canceling headphones, moving an employee due to a loud environment, and more. Katie said that, typically, the accommodations she sees don’t cost a lot of money to the company, if any.

1.

2.

3.

4.

5.

Neurodiversity and Accounting are a Good Fit

Reach out to the autism community.

Rethink your hiring process.

Don’t limit opportunities.

Be prepared to make accommodations.

Look for office champions.

Source: Sarah Ovaska-Few, Promoting neurodiversity, Journal of Accountancy, 2018, https://www.journalofaccountancy.com/ issues/2018/jan/ey-pilot-program-workers-with-autism.html

According to Katie, there are multiple reasons a neurodiverse person would be suited for a career in accounting.

“Generally speaking, they often have a keen level of attention to detail, as well as accuracy and ability to detect errors, and when we’re talking numbers, that’s critical,” she said. “Accounting can be sort of autonomous, and the idea of not interacting with the public can be attractive.”

Tori Smith is a student at Ball State University in Indiana and the Virginia Society of CPAs summer communication intern.

Even though Katie said that they might prefer to work alone, that isn’t to say they wouldn’t add benefit to the team.

Reprinted with permission from the Virginia Society of CPAs.

“They [have] innovation, creativity and problem solving,” she said. “They view situations through a different lens and have so many different perspectives.”

Continue Reading

Neurodiverse individuals interested in accounting can start with their job searches. According to Katie, larger companies usually have a web page that mentions different protected statuses that will disclose their neurodiversity practices. She said it’s a good way to gain an understanding about who they are.

Regarding asking for an accommodation, “Simply say, ‘These are my limitations, and I would appreciate support,’” she said.

“If the employee knows what support will help them, they and the employer can list them out. In most cases, they will be

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Reference 1 Singer, Judy. 2017. Neurodiversity: The Birth of an Idea.

•

“The autism spectrum: An untapped talent source” — Tennessee Society of CPAs: wscpa.org/talent

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“Neurodiversity as a competitive advantage: Why you should embrace it in your workforce” — Harvard Business Review: wscpa. org/advantage

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“Promoting neurodiversity” — Journal of Accountancy: wscpa. org/pilot

Learn More Join the DEI Resource Group at: wscpa.org/resource-group-committees

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AUDITING

What’s the Risk?

Updated quality management standards promote a risk-based approach to planning and performing group audits.

Natalya Yashina, CPA, DASM, and Diane Walker, CPA Maintaining high audit quality is crucial for ensuring public trust in financial reporting, and it involves more than just external audit procedures. CPA firms must comply with a set of quality control standards to ensure the elements of a system of quality control are in place to meet professional standards.

The current standards, particularly those related to technology and business environments, haven't been updated since 2006.

In June 2022, the AICPA Auditing Standards Board (ASB) and Review Services Committee issued quality management standards that apply to firms performing engagements in accordance with the SASs, SSARSs and SSAEs. In addition to updating the standards for advances in technology and business environments, the new standards1 replace the current “one size fits all” model that addresses potential issues with quality, consistency, leadership and governance. The new standards may require significant multi-year efforts to implement. While there is time before they become effective, it's important not to delay implementation.

The standards include: •

Statement on Quality Management Standards (SQMS) No.1: Addresses the system of quality management and deals with a firm’s responsibility to design, implement, and operate a system of quality management for its accounting and auditing practice. The standard supersedes Statement on Quality Control (SQCS) No. 8, A Firm’s System of Quality Control. In addition, SQMS No.1 requires the systems of quality management be designed and implemented in compliance with the standard by Dec. 15, 2025, and to be evaluated within one year following Dec. 15, 2025.

•

Statement on Quality Management Standards No.2: Deals with engagement quality reviews and affects audits or reviews of financial statements and other engagements in the accounting and auditing practice. SQMS 2 is effective for audits or reviews of financial statements for periods beginning on or after Dec. 15, 2025, and other engagements in the firm’s accounting and auditing practice beginning on or after Dec. 15, 2025.

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•

Statement on Auditing Standards (SAS) No.146, Quality Management for an Engagement Conducted in Accordance with Generally Accepted Auditing Standards: Addresses the auditor’s specific responsibilities in regard to quality management at the engagement level for a financial statement audit and the related responsibilities of the engagement partner. SAS 146 is effective for engagements conducted in accordance with Generally Accepted Auditing Standards (GAAS) for periods beginning on or after Dec. 15, 2025.

•

Statement on Standards for Accounting and Review Services (SSARS) No.26, Quality Management for an Engagement Conducted in Accordance with Statements on Standards for Accounting and Review Services: Focuses on standards at the engagement level for accounting and review services and the related responsibilities of the engagement partner. SSARS 26 is effective for engagements performed in accordance with the SSARS for periods ending on or after Dec. 15, 2025.

In March 2023, the ASB issued SQMS No.3, Amendments to QM Sections 10, A Firm’s System of Quality Management, and 20, Engagement Quality Reviews, as well as SAS No. 149, Special Considerations — Audits of Group Financial Statements (Including the Work of Component Auditors and Audits of Referred-to Auditors). The amendments to QM 10 and 20 conform certain language terms to language used in SAS 149. SAS 149 requires a risk-based approach to planning and performing a group audit, and the group auditor must use their professional judgement in determining over which components further audit procedures need to be performed, based on assessed risks.

SAS 149 is effective for periods ending on or after Dec. 15, 2026, and SQMS No. 3 is effective concurrently with the effective dates provided in QM sections 10 and 20.

What’s new?

The biggest change is a new risk-based approach to quality management, which means the system of quality management should be adaptable to changes in the firm and its engagements.

The components of the system have also been revised, with two new components added. There are eight components the system should address: 1.

2.

3.

4.

5.

6.

7.

8.

The firm’s risk assessment process Governance and leadership Relevant ethical requirements Acceptance and continuance of client relationships and specific engagements Engagement performance Resources Information and communication The monitoring and remediation process

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To implement a risk-based approach, firms should follow a three-step process and 1) establish quality objectives, 2) identify and assess risks that may hinder their achievement, and 3) design and implement appropriate responses to address the quality risks. The reality is that firms are now required to perform a gap analysis on their systems of quality, similar to the process used to assess compliance of internal controls under the COSO Framework.

Other key changes include increased requirements for governance and leadership, enhanced monitoring and remediation processes, and new requirements for networks and service providers.

Here are some of these key changes in more detail.

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Information and Communication The information and communication component of the new system of quality management has no equivalent in prior quality standards. This new component emphasizes the importance of establishing information and communication processes that support the system of quality management. The focus here is on the flow of information and communication which is linked to the firm’s culture, and internal and external communication.

The firm’s information system needs to include relevant and reliable information that is accurate, complete, timely, and valid and which supports the system of quality management.

Governance and Leadership The standards contain more robust requirements for governance and leadership in setting the tone at the top, including appropriate

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AUDITING Natalya Yashina, CPA, DASM, is the founder and CEO of Capital Accounting Advisory, LLC, where she and her team provide training, project management, training needs assessment, team performance improvement, and strategy and visioning services to audit firms and non-profit organizations. Prior to expanding her firm’s offerings, Natalya focused on technical accounting and financial reporting services.

qualifications and accountability. Quality should be a key consideration in the firm's strategic decisions and actions, such as financial and operational priorities.

Monitoring and Remediation An enhanced monitoring and remediation process emphasizes identification and remediation of issues on a timely basis. There is more transparency in what is required to be considered in determining the nature, timing, and extent of the monitoring activities. The standard also introduces the new term “findings,” which can be accumulated from monitoring or other activities or relevant sources, i.e., external inspections. The firms are required to evaluate these findings and determine whether deficiencies exist. The establishment of policies and procedures for monitoring activities is important, including the qualifications of those who perform such activities. These individuals should be competent, objective, and have enough time to complete their tasks. Identifying deficiencies and designing remedial actions should involve evaluating severity and pervasiveness through root cause analysis.

Diane Walker, CPA, is a partner with Johnson Lambert LLP where she is in charge of the firm’s Quality Management function and leads the employee benefit plan practice. Johnson Lambert LLP is a multi-office, niche-focused firm that provides audit, tax and advisory services to insurance entities, employee benefit plans and nonprofit organizations. She previously served terms on the AICPA’s Employee Benefit Plan Audit Quality Center Executive Committee and Employee Benefit Plan Expert Panel.

Reference 1. AICPA, "Proposed Quality Management Standards", 2021, https://us.aicpa. org/content/dam/aicpa/research/exposuredrafts/accountingandauditing/ downloadabledocuments/executive-summary-project.pdf Reprinted with permission from the Virginia Society of CPAs.

There are many resources offered by the AICPA to assist with the implementation of the new quality management standards. The first step: Review and understand the standards and develop a timeline for implementation. Use the AICPA tool, "Quality Management Standards: What's Changing and What You Should Be Doing Now," which includes examples of timelines and a detailed comparison of differences between QS section 10 and the current quality control standards. You can find that tool at https://www.aicpa-cima.com.

Learn More Join the WSCPA's Accounting, Auditing & Review Standards Committee at wscpa.org/resource-group-committees.

Though there is still time before the standards become effective, the extended implementation period is there for a reason! The updated standards will be a big change for some firms and may require additional time and resources to address identified gaps, findings and deficiencies, and ensure compliance with the deadline.

illustrations: © iStock/VectorHot, © iStock/Feodora Chiosea

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Utilizing ChatGPT as a Tax Assistance Tool: A Practical Guide Sheneya Wilson, MS, MBA, CPA, Fola Financial LLC

Questioning whether you need to adopt artificial intelligence (AI) in your tax practice today is like an accountant 20 years ago deciding whether to use tax preparation software or continue to prepare paper tax returns. Thus, putting AI tools into practice should be something that practitioners embrace.

What is ChatGPT? Think Google, with a human-like consciousness — a search engine with the ability to put information into context and make it more useful. Developed by OpenAI, ChatGPT (chat.openai.com) is an AI-powered language model trained on an extensive dataset, enabling it to comprehend and respond to a wide array of queries.

How to Use ChatGPT? Think of ChatGPT as your really smart best friend of whom you can ask any question. The more time you spend interacting and communicating with this friend, the better the conversations usually are and the better advice you’ll receive.

Utilizing ChatGPT can be broken into the following four steps: 1.

Define your objective. Clearly state what you want to achieve by using ChatGPT, such as getting answers to questions or solving specific problems.

2.

Provide clear and specific prompts. Ask ChatGPT clear and specific questions or provide detailed instructions to get accurate and relevant responses.

3.

Assess quality and evaluate accuracy. Check the responses from ChatGPT to ensure they are reliable and align with what you know or have learned.

4.

Iterate to customize output as needed. Make adjustments to your questions or prompts and try different approaches to get better results from ChatGPT.

Now let’s apply these steps in practice.

ChatGPT as a Tax Assistance Tool Here’s an example scenario: Kevin, a tax practitioner, has a client who wants to understand the tax implications of the sale of an investment property while in the process of filing his tax returns with Kevin’s firm. Kevin has no prior experience working with this type of client transaction and decides to proactively seek advice from ChatGPT. He walks through the four-step process: illustration: © iStock/DrAfter123, photo: © iStock/gorodenkoff

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TAX TECHNOLOGY 1.

Objective: His objective is to gain relevant knowledge of the tax implications of a client’s investment property sale and be able to provide a proper response to the client’s inquiry.

2.

Prompt: Kevin enters the following prompt into ChatGPT: What are some questions a tax accountant should ask as it relates to a client looking to gain an understanding of the tax implications of an investment property sale?

ChatGPT-4 Output (top 5): • What was the purchase price of the investment property and when was it acquired?

• Depreciation Recapture: If the client previously claimed depreciation deductions for the property, a portion of the gain may be subject to depreciation recapture tax at a higher rate. Relevant IRC code: Section 1250.

• Net Investment Income Tax (NIIT): Depending on the client’s income and filing status, they may be liable for an additional 3.8% NIIT on their investment income, including capital gains from the sale of the property. Relevant IRC code: Section 1411.

4.

• Have there been any improvements or renovations made to the property during the ownership period?

• What is the selling price of the property and when was it sold?

• Are there any outstanding mortgages or loans on the property?

• Did the client use the property for personal purposes, such as a vacation home, in addition to rental purposes?

3.

Evaluation: Kevin evaluates the output to determine whether these questions are relevant to his objective. Many of them are, so he decides to include them as discussion points during his preparation meeting with the client. Though this response was good, it doesn’t really meet all of his objectives. He enters the following prompt to continue his chat: What are some of the common tax implications for a client who sold an investment property during the tax year. Please provide the relevant IRC code for reference.

ChatGPT-4 Output (top 3): • Capital Gains Tax: The client may be subject to capital gains tax on the profit made from the sale of the property. The specific tax rate depends on various factors, such as the client’s income level and how long they held the property.

Relevant IRC code: Section 1221.

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Iteration: Kevin now has a clearer direction to begin researching the tax code and properly advising the client.

Kevin’s experience demonstrates how powerful and useful AI tools such as ChatGPT can be for tax practitioners and firm owners. However, it is important to remember that while ChatGPT can offer valuable assistance, professional expertise and judgment still remain crucial in interpreting and applying the information provided by the model — and this is great news for practitioners who seek to leverage technology to propel their success.

Sheneya Wilson, MS, MBA, CPA, is the founder and CEO of FOLA Financial LLC. Sheneya can be reached at sheneyawilson@folafinancial.com.

Reprinted with permission of the New Jersey Society of CPAs, njcpa.org.

Learn More • Register now for the Pacific Tax Institute, Oct 26-27 at wscpa.org/pti23.

•

Join the Tax Resource Group at wscpa.org/resource-groupcommittees.

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COMPLIANCE

Illustration: © iStock/Vitalii Gulenok

Compliance with the Federal Trade Commission 'Safeguards Rule' Suzanne M. Holl, CPA The Gramm-Leach-Bliley Act (“GLBA”) was passed by Congress in 1999 with bi-partisan support. A component of the GLBA, its Safeguards Rule, was first established in 2003, and required organizations defined as “financial institutions” to establish measures to keep their customers’ private information secure. In accordance with GLBA provisions, the Federal Trade Commission (“FTC”) has authority to issue regulations ensuring that financial institutions protect the privacy of consumers’ personal financial information.

In late 2021, the FTC amended the Safeguards Rule to make changes to address current technology. The changes included a more expansive definition of “financial institutions” and added new responsibilities requiring enhanced administrative, technical, and physical safeguards designed to protect customer information. Certain provisions of the updated rule were effective December 9, 2022, and the remaining provisions became effective June 9, 2023. The revised Safeguards Rule specifies safeguards covered organizations must implement as part of their information security program.

Under the guidance, the definition of “financial institutions” has a broad context — which can impact organizations across many industries. For example, nonbanking financial institutions engaging in financial activities or incidental to such financial activities (e.g.,

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CPA firms, tax professionals) that collect Personally Identifying Information (“PII”) need to be aware of changes that build on the original Safeguards Rule framework in key data security areas.

The overarching primary objectives for an information security program under the rules include: •

Ensuring the security and confidentiality of client information.

•

Implementing safeguards against anticipated threats to client information.

•

Preventing unauthorized access to information systems linked to client information.

Is your firm fully compliant with the revised Safeguards Rule?

The Safeguards Rule applies to organizations of all sizes, with reduced compliance standards for entities maintaining fewer than 5,000 client/customer records. What constitutes client/ customer records is somewhat unique for every organization, and that certainly holds true for CPA firms and tax professionals.

As the revised Safeguards Rule applies to all PII organizations maintain, for accounting firms this includes the PII maintained for former and current clients, and any ancillary contacts associated with the client that a firm maintains including, but not limited to, the PII of current and former clients’ owners, members, partners, employees, and customers.

For example, if a firm prepares K-1s for hundreds of partners of a partnership client, the personally identifiable records would include the PII of each partner. Since there is no business client exception, it would be unwise for most CPA firms to rely on the 5,000 client/customer records exception without performing due diligence to ensure they have adequate systems in place to accurately track the number of personally identifiable records maintained for current and former clients. Under the Safeguards Rule, at any point an organization exceeds 5,000

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COMPLIANCE personally identifiable records, the entity no longer qualifies for the Safeguards Rule’s exception and must comply with all of the Rule’s required safeguards.

Information Security Plan Under the Safeguards Rule, a firm is required to have a written Information Security Plan that outlines the firm’s information security program protecting its client data. Information Security Plans should be individually crafted to be sufficient and appropriate for the firm’s size and complexity, nature and scope of activities, and the sensitivity of its client information.

CAMICO has created an illustrative Written Information Security Plan template. The template is designed to incorporate and reference established firm policies. Download the document at wscpa.org/securityplan.

A CPA firm’s efforts to comply with the Safeguards Rule is organization-specific and, as such, CAMICO recommends that each firm work with their IT/cyber specialists and legal counsel to modify and tailor this template to ensure the firm’s compliance with the GLBA’s Safeguards Rule and other applicable laws.

Risk Management Tips To comply with the updated Safeguards Rule, a CPA firm’s Information Security Plan needs to outline the physical, technical, and administrative safeguards the firm utilizes to protect its confidential client data from potential breaches and cyberattacks. The plan should appropriately incorporate the following elements:

•

Designation of a qualified person responsible for overseeing, implementing, and updating, as needed, the information security program;

•

Creation of a written risk assessment that identifies reasonably foreseeable internal and external risks and assesses the sufficiency of any safeguards in place to control those risks;

•

The design and implementation of safeguards appropriate to the size and complexity of the organization to control its identified risks. The following are a few examples of safeguards that should be considered, although this list is not meant to be all-inclusive: √ encryption of data in transit and at rest √ firewalls √ password protection √ securing access to file rooms and file cabinets √ implementing and periodically reviewing access controls to client information — limiting access to those with a legitimate business need √ implementing multi-factor authentication;

•

The regular monitoring and testing of the effectiveness of established safeguards (i.e., monitor and log activity to detect unauthorized access through continuous monitoring, annual penetration testing, or by other appropriate vulnerability assessments);

Although the FTC’s deadline for compliance has passed, it is never too late to reassess and update as needed the firm’s efforts to comply with all applicable provisions of the Safeguards Rule.

Remember that developing an information security program is not a one-size fits all approach. Every firm will need to ensure that they have the required safeguards in place for their size (based on the number of personally identifiable records maintained), complexity, and the nature and scope of the services they render.

From a risk management perspective, DOCUMENTATION is critical, and the first line of defense if your firm were ever alleged to have not complied with the Safeguards Rule. For example, if your firm is limiting its compliance efforts to the minimum required for firms with less than 5,000 personally identifiable records, be sure to have appropriate documentation of that determination and ensure that you have a mechanism in place to alert you if you ever have 5,000 or more personally identifiable records.

In addition, CAMICO strongly encourages firms to take the time needed to keep the firm’s Information Security Plan relevant and updated to showcase your ongoing efforts to ensure compliance with the spirit and intent of the Safeguards Rule.

Suzanne M. Holl, CPA, is senior vice president of loss prevention services with CAMICO, bringing more than 30 years of experience in accounting, including Big Four and private industry knowledge.

Resources for CPA Firms •

FTC Safeguards Rule: What Your Business Needs to Know, wscpa.org/ftcrule

•

IRS News Release I.R. 2022-147 titled “Security Summit releases new data security plan to help tax professionals” for additional resources, including a link to IRS Publication 5708 (10-2022), Creating a Written Information Security Plan for Your Tax & Accounting Practice, wscpa.org/irsnews, wscpa.org/plan

•

Security awareness training;

•

Periodic assessment of third-party service providers;

•

Keeping your information security program current;

•

A written incident response plan; and

•

•

Periodic reporting to the firm’s governing body (e.g., firm’s Executive Committee, Managing Partner).

IRS Publication 4557, Safeguarding Taxpayer Data (Rev. 7-2021), wscpa.org/irsnews2

•

AICPA Tax Section’s Gramm-Leach-Bliley Act Information Security Plan Template, wscpa.org/aicpa1

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Upcoming CPE A selection of WSCPA CPE events scheduled November - January are listed.

To view the thousands of courses and complete details, please visit the CPE & Event Catalog at wscpa.org/cpe.

Pacific Tax Institute

a Join us for

Falling for Tax Excellence Oct 26-27

Fall Conference Pacific Tax Institute Oct 26-27 | Lynnwood & Webcast | 16 Credits

Not-For-Profit Conference Nov 29-30 Nov 15

Fraud Conference Navigating the Waters with Confidence

Fraud Conference

Not-For-Profit Conference

Nov 15 | Bellevue & Webcast | 8 Credits

Nov 29-30 | Bellevue & Webcast | 16 Credits

The Washington Society of CPAs is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of group-live and group-internet-based continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its web site: www.nasbaregistry.org For more information regarding refunds, complaints, program cancellations or other policies visit www.wscpa. org/cpe/cpe-policies or call 425.644.4800

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The Washington CPA Fall 2023

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EDUCATION AND EVENTS

Register at www.wscpa.org/cpe

WSCPA Blue Ribbon CPE Hosted and hand-selected by the WSCPA Online CPE DATE

COURSE TITLE

11/1

Introduction to Forensic Accounting WEBCAST

4

11/1

Washington Taxation for Service Businesses With Mark Hugh WEBCAST

2

11/1

Member Exclusive: Managing Employee Benefit Plan Audit Risks: Insights from Camico WEBINAR

1

11/2

Form 990: Best Practices for Accurate Preparation WEBCAST

8

11/2

Rules, Regulations and Ethics for CPAs in Washington - 2023 WEBCAST

4

11/3

The Complete Guide to Washington Death Taxation WEBCAST

8

11/3

Prix Fixe: Cracking the Case: A Guide to Forensic Audits WEBINAR

1

11/6

Enterprise Risk Management Concepts and Strategy for Small and Medium-Sized Companies WEBCAST

4

11/6

Protecting Digital Data - More Important Now Than Ever Before WEBCAST

4

11/6

The Washington Capital Gains Tax WEBCAST

1

11/7

Contract Accounting and Lease Accounting and Their Impact on Construction Contractors WEBCAST

2

11/7

Federal Tax Update for Business with Greg and George WEBCAST

4

11/7

Federal Tax Update for Individuals with Greg and George WEBCAST

4

11/8

Social Security and Medicare: Maximizing Retirement Benefits WEBCAST

4

11/8

Surgent's Comprehensive Guide to Tax Depreciation, Expensing, and Property Transactions WEBCAST

8

11/9

Limited Liability Companies: Losses, Liquidations, Terminations, Continuations, and Sales WEBCAST

4

11/10

CFO - Skills for 2023 and Beyond WEBCAST

8

11/10

Federal Tax Update - Individual and Business Current Developments with Pat Garverick WEBCAST

8

11/13

Advanced Partnership Taxation with Greg and George WEBCAST

8

11/14

S Corporations -- Planning and Tax Strategies WEBCAST

8

11/15

Evaluating Fraud Risk in a Financial Statement Audit WEBCAST

4

11/15

Fraud Conference, Bellevue & WEBCAST

11/15

Member Exclusive: Unlocking Innovation: How Inclusive Meetings Can Help Your Organization Succeed WEBINAR

1

11/15

Washington Ethics and New Developments 2023 WEBCAST

4

11/16

Becoming a Tax Ninja: Loss Limitations -- Basis, At-risk, Passive Activity and 461(l) WEBCAST

2

11/16

Maximizing Social Security Benefits WEBCAST

2

11/17

Estate Planning - Business Issues WEBCAST

8

11/17

Introduction to Business Acquisitions WEBCAST

8

11/17

Prix Fixe: ASC 842 - Lessons Learned from Adoption WEBINAR

1

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CREDITS

IN-PERSON EVENT

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Register at www.wscpa.org/cpe

EDUCATION AND EVENTS

Online CPE DATE

COURSE TITLE

11/20

Guide and Update to Compilations, Reviews, and Preparations WEBCAST

4

11/20

International Taxation WEBCAST

8

11/21

Preparation and Compilation Engagements Under the SSARS WEBCAST

4

11/21

The Complete Guide to Estate Administrations WEBCAST

8

11/21

Washington Ethics and New Developments 2023 WEBCAST

4

11/2911/30

Not-For-Profit Conference, Bellevue & WEBCAST

11/30

Common Deficiencies in SSARS Engagement WEBCAST

4

11/30

Washington Sales Tax With Mark Hugh WEBCAST

2

12/1

Hottest Tax Topics for 2022 WEBCAST

8

12/1

Prix Fixe: Loss Prevention Tips from an A&A Perspective: The Paybook WEBINAR

1

12/1

Rules, Regulations and Ethics for CPAs in Washington - 2023 WEBCAST

4

12/4

Annual Update for Defined Contribution Plans WEBCAST

2

12/4

Lease Accounting: The Impact of Changing Standards on Both Lessors and Lessees WEBCAST

2

12/4

The Washington Capital Gains Tax WEBCAST

1

12/5

Financial and Estate Planning Techniques of Charitable Giving WEBCAST

8

12/5

Government GAAP Update WEBCAST

2

12/6

Government and Nonprofit Frauds and Controls to Stop Them WEBCAST

4

12/6

The Best Estate and Financial Planning Topics of 2023 WEBCAST

8

12/6

Washington Sales Tax With Mark Hugh WEBCAST

2

12/7

Advanced Income Tax Accounting WEBCAST

8

12/7

Applying the Yellow Book to a Financial Statement Audit WEBCAST

4

12/11

CFO - Staying Ahead in a Dynamic Economy WEBCAST

8

12/11

Federal Tax Update - Individuals (Form 1040) with Pat Garverick WEBCAST

8

12/1112/12

S Corporations: Hot Issues Of 2023 WEBCAST

16

12/12

Federal Tax Update - C and S Corporations, Partnerships and LLCs (Forms 1120, 1120S and 1065) with Pat Garverick WEBCAST

8

12/12

Washington Ethics and New Developments 2023 WEBCAST

4

12/13

Project Management for Finance Professionals WEBCAST

8

12/13

Member Exclusive: Year-End Update: A Look at the State of the Profession WEBINAR

1

12/14

Federal Tax Update for Business with Greg and George WEBCAST

4

12/14

Federal Tax Update for Individual with Greg and George WEBCAST

4

12/14

Lessons Learned from Successful Companies WEBCAST

2

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CREDITS

IN-PERSON EVENT

16

www.wscpa.org

EDUCATION AND EVENTS

Register at www.wscpa.org/cpe

Online CPE DATE

COURSE TITLE

CREDITS

12/15

Annual Update and Practice Issues for Preparation, Compilation, and Review Engagements WEBCAST

8

12/15

CFO - Today's Staff Retention and Accounting WEBCAST

8

12/15

Washington Taxation for Service Businesses With Mark Hugh WEBCAST

2

12/19

Section 199A: Schedule K-1 Reporting by Relevant Pass-Through Entities WEBCAST

4

12/19

Working Paper Documentation WEBCAST

2

12/20

IRS Disputes WEBCAST

4

12/20

S Corporations: Advanced Workshop WEBCAST

8

12/21

Starting a Small Business: What Every Trusted Advisor and Entrepreneur Needs to Know WEBCAST

2

12/21

Washington Ethics and New Developments 2023 WEBCAST

4

1/4

Tax Planning Based on Form 1040 WEBCAST

8

1/5

Making the Best of Bad Situations WEBCAST

8

1/9

Income Tax Accounting WEBCAST

8

1/10

Federal Tax Update for Business with Greg and George WEBCAST

4

1/10

Federal Tax Update for Individual with Greg and George WEBCAST

4

1/12

Prix Fixe: R&D Tax Credit: Startups and Software Companies WEBINAR

1

1/16

This Year's Top Tax and Financial-Planning Ideas WEBCAST

4

1/17

The Complete Guide to Preparing Forms 706 and 709 WEBCAST

8

1/18

Rules, Regulations and Ethics for CPAs in Washington - 2023 WEBCAST

4

1/19

Prix Fixe: Keeping Up with the Latest Developments: A Comprehensive FASB Update on Key Projects WEBINAR

1

1/24

Member Exclusive: Insights and Analysis: A Comprehensive Economic Update WEBINAR

1

1/26

Prix Fixe: Beyond Borders: Tackling Cross-Border Tax Issues for a Successful Tax Season WEBINAR

1

Online CPE DATE

COURSE TITLE

11/1311/16

Management and Leadership Essentials Training WEBCAST

24

11/28

Advanced Management and Leadership Essentials Mini-Course WEBCAST

2

12/1112/14

Advanced Management and Leadership Essentials WEBCAST

16

12/19

Advanced Management and Leadership Essentials Mini-Course WEBCAST

2

1/81/11

Basic Staff Training WEBCAST

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CREDITS

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CLASSIFIED ADS West Coast-Based Tax & Accounting Practice (1231): This highly profitable tax Practice is a prominent leader in the tax and accounting industry on the West Coast. The Practice is full-service, providing tax preparation and planning, business advice and consulting, bookkeeping, accounting, and financial statements – everything needed to help owners plan for and grow their businesses. The Practice has earned a well-respected name "brand" with prospects, peers, and loyal clients who have placed their trust in its services. The Practice’s success can largely be attributed to its established brand, loyal client base, and dedicated and tenured staff of over 30 employees. The Practice has grown its client base each of the last few years, with over ~1,700 active and loyal clients as of July 2023. The practice employs a team approach to client service and is known for having a holistic and personable approach, which its clients appreciate. Additionally, the Practice has proven processes and procedures that result in accurate, thorough, and efficiently prepared projects and services for its clients. To learn more, call 253.509.9224 or email info@ privatepracticetransitions.com, with "1231 West Coast Based Tax & Accounting Practice” in the subject line.

Profitable Fresno Tax & Accounting Firm (CA 1215): Established in 2012, this Certified Public Accounting practice has established a strong, longterm presence in the greater Fresno area. Since its inception, the Practice has offered a wide range of tax and accounting services to both business and individual clients. The Practice’s service by revenue breakdown is 35% Tax Preparation and Planning, 34% Accounting & Auditing, and 31% Consulting, Forensic & Valuation. Including the Owners, the Practice has thirteen (13) staff members serving its ~477 active clients. Over the past three (3) years, the Practice has averaged gross revenues of approximately $1,978,397 (2020-2022). The Practice’s success is in large part due to the dedicated and seasoned staff who are highly skilled with a strong focus on customer service. This Practice is poised for growth and increased revenue under new ownership.

To learn more, call 253.509.9224 or email info@ privatepracticetransitions.com.

for agreed-upon compensation through April 2024 to help ensure client retention under new ownership. To take advantage of this exciting business opportunity, call 253.509.9224 or email info@privatepracticetransitions.com.

Profitable Portland Tax & Accounting Firm Ready for New Owner (OR 1213): Established in 1990, this tax and accounting practice located in the southwest suburbs of Portland has offered a wide range of tax services to both business and individual clients as well as audit services to housing and employee benefit clients. The Practice’s service by revenue breakdown is 37% Housing Project Audits, 30% Tax Preparation, Planning, and Consultation, 24% Benefit Plans, 8% Payroll Audits, and 1% Non-Housing Audits. Including the Practice’s five (5) Partners, the Practice has seventeen (17) staff members serving its ~1,080 active clients. Over the past three (3) years, the Practice has averaged gross revenues of approximately $2,545,327 (2019-2021). To take advantage of this exciting business opportunity, call 253.509.9224 or email info@privatepracticetransitions.com.

Successful Cowlitz County Tax & Accounting Practice (WA 1222): Since the 1970s, this Washington firm has been providing tax and bookkeeping services to both business and individual clients. The current Owners acquired the Practice in 1991. Today, the Practice’s service by revenue breakdown is 43% Individual and Trust Tax Preparation, 23% Business Tax Preparation, 20% Trail Balance Preparation, 6% Payroll and Excise Tax, 5% Consulting, and Other, and 3% Financial Statement Preparation. Including the Owners, the Practice has five (5) staff members serving its ~328 active clients. In 2022, the Practice brought in $526,005 in gross receipts which was a 17.7% YoY increase. Continued growth in 2023 with gross receipts up 11.1% YoY through April! The Practice’s success can largely be attributed to its established name and loyal clients who have grown to trust its services. The Owners would like to continue working part-time/seasonally

Highly Rated Methow Valley Tax & Accounting Firm (WA 1205): Over the past 39+ years, this Washington tax and accounting firm has offered tax and bookkeeping services to both business and individual clients in Winthrop and surrounding areas.

As of June 2022, the Practice has approximately ~662 active clients and has seen great client retention as is evidenced by the increase in client counts year-over-year. The Practice’s service by revenue breakdown is 72% Tax Preparation & Consulting, and 28% Bookkeeping. In 2021 the Practice brought in $597,220 in gross receipts which was a 12.6% YoY increase! Including the Owner, the Practice has seven (7) loyal staff members.

The Owner is willing to stay on part-time for up to two (2) to three (3) years if desired. To take advantage of this “turnkey” business opportunity, call us at 253.509.9224 or send an email to info@ privatepracticetransitions.com, with “1205 Highly Rated Methow Valley Tax & Accounting Firm” in the subject line.

Profitable King County Tax & Accounting Firm (WA 1212): Over the past 26+ years, this Seattle Practice has offered a wide range of tax and estate services to both business and individual clients.

The Practice’s service by revenue breakdown is 45% Individual Tax Preparation and Planning, 20% Business Tax Preparation and Planning, 27% Trust & Estates Tax Preparation and Planning, 4% Reviews & Compilations, 2% Bookkeeping, and 2% Other.

Including the Owners, the Practice has five (5) staff members serving its ~850 active clients. Over the past two (2) years, the Practice has averaged impressive gross revenues of approximately $1,825,000 (2021-2022). The Practice’s success is in large part due to the dedicated and seasoned staff who are highly skilled with a strong focus on customer service. This Practice is poised for growth and increased revenue under new ownership.

To learn more, call 253.509.9224 or email info@ privatepracticetransitions.com.

Mergers & Sales

VOLUNTEER OPPORTUNITIES

Interested in using your CPA skills to make an impact in your local community? WSCPA has a list of volunteer opportunities for you to check out!

• • • •

SciAccess Type 1 United Washington Wild South Park Senior Citizens

Find or submit an opportunity at: wscpa.org/volunteer-opportunities

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The Washington CPA Fall 2023

IBA Sells Privately Held Companies: Do you represent a client who is ready to retire or has taken a company as far as they want to or can? IBA is the Pacific Northwest’s oldest business brokerage (M&A) firm. We are professional negotiators with over 4200 completed transactions. Please contact us if we can be of assistance at 425.454.3052, 509.907.9406, or www.ibainc.com.

Vancouver and Snohomish County, WA and Portland, OR Firms for Sale: With over 18 years of experience, Accounting Biz Brokers specializes in the sale of accounting firms and tax practices.

Selling your accounting firm is complex. Let us make it simple. For Sale! Vancouver, WA, Gross $500k; Snohomish County, WA, Gross $155k; Portland, OR, Gross $935k. Contact Christy Hudson, Christy@accountingbizbrokers.com, 501.499.4357.

Have a client / owner ready to explore the business sale process? Business owners are experts on their business. We are experts on the process of selling a business. Call 206.703.3555 for a confidential, no commitment consultation. Check out resources and learn more at wabusinessbrokers. com. Put our experts to work for you! Contact Ryan Hemmert, info@wabusinessbrokers.com or 206.703.3555.

Advertise with the WSCPA Learn more at: wscpa.org/classifieds

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CLASSIFIED ADS Successful Lincoln County Tax & Accounting Practice (OR 1216): Since 2001, this Oregon tax and accounting firm has offered a wide range of services to both business and individual clients.

The Practice’s service by revenue breakdown is 70% Tax Preparation and 30% Accounting & Payroll. The Practice currently has five (5) staff members serving its ~750 active clients. Over the past three (3) years, the Practice has averaged gross revenues of approximately $501,021 (20202022). The Practice’s success is in large part due to the dedicated staff who are highly skilled with a strong focus on customer service. For more information, call 253.509.9224 or email info@ privatepracticetransitions.com.

Successful Pierce County Bookkeeping & Tax Firm (WA 1214): For over 40 years, this Washington Practice has offered bookkeeping and accounting services to both business and individual clients.

The Practice’s service by revenue breakdown is 65% Bookkeeping, 30% Income Tax Services, and 5% Other. As of October 2022, the Practice has ~500 total clients. Over the past three (3) years, the Practice has averaged gross revenues of approximately $621,953 (2019-2021). The Practice’s success is in large part due to the dedicated and highly skilled staff with a strong focus on customer service. The Practice has five (5) loyal staff members including the Owners. With loyal staff and many word-of-mouth referrals, the Practice is poised for growth and increased revenue under new ownership. To learn more about this exciting business opportunity, call 253.509.9224 or email info@privatepracticetransitions.com.

Highly Profitable King County Tax & Accounting Practice (WA 1218): Over the past 27 years, the Practice has offered a wide range of tax and accounting services to both business and individual clients. The Practice’s service by revenue breakdown is 63% Tax Prep, 19% Payroll Services, and 18% Accounting & Bookkeeping. Including the Owner, the Practice has eight (8) staff members serving its ~200 active clients. Over the past three (3) years, the Practice has averaged gross revenue of approximately $1,110,903. Year-to-date gross revenue as of May 9, 2023, is $608,055 (Up 7.8% YoY) with year-end 2023 gross revenue anticipated to be slightly higher than 2022. The Practice is

highly respected in the community and prides itself on providing top-notch customer service.

The Owners and the staff are passionate about taking care of their clients as is evidenced by their proven client retention. The Owner is willing to provide transition assistance and help with goodwill transfer, business development, and other “mentoring” functions for an agreed-upon period if desired. To take advantage of this exciting business opportunity, call 253.509.9224 or email info@privatepracticetransitions.com, with "1218 Highly Profitable King County Tax & Accounting Practice" in the subject line.

2022 during the same time period. Projections for 2023 year- end show revenues up another ~10% YoY. The Owners are willing to provide transition assistance and help with goodwill transfer, business development, and other “mentoring” functions for an agreed-upon time to ensure the new owner’s return on investment is realized. For more information, call us at 253.509.9224 or email info@privatepracticetransitions.com.

Highly Respected King CountyTax & Bookkeeping Practice w/2 Locations (WA 1229): Over the past 35+ years, this King County Practice has offered a wide range of tax and accounting services to both business and individual clients. The Practice’s service by revenue breakdown is 50.5% Tax Return Preparation, 29.1% Bookkeeping, 9.5% Payroll Services, 7.3% Review & Consulting, and 3.6% Other Fees and Services. In 2022, the Practice brought in over $2.6M in gross receipts, and through June 2023 the TTM revenues are up to $2.77M, an increase of 6.5% compared to year-end 2022.

As of July 2023, the practice has approximately 2,625 active clients and a total of 3,286 clients in their database. The Practice has twenty-one (21) staff members including the Owners who are willing to provide transition assistance and help with goodwill transfer, business development, and other “mentoring” functions for an agreedupon period. Interested in this exciting business opportunity? Call 253.509.9224 or email info@ privatepracticetransitions.com.

Profitable King County Bookkeeping & Tax Practice (WA 1227): For over 19 years, this Washington Practice has offered a wide range of tax and accounting services to both business and individual clients. The Practice’s service by revenue breakdown is 49% Tax Returns, 35% Bookkeeping and 16% Payroll Services. Including the Owners, the Practice has six (6) staff members serving its ~780 active clients. In 2022, the Practice brought in over $763k in tax and accounting gross receipts, a YoY increase of 19.4%! Additionally, the Practice, in the trailing twelve months, brought in gross receipts of over $800k, a 4.9% increase over

STATEMENT OF OWNERSHIP, MANAGEMENT, AND CIRCULATION (REQUIRED BY 39 U.S.C. 3685) 1. Publication Title: The Washington CPA 2. Publication No.: 0000-9754 3. Filing Date: 28 September 2023. 4. Issue Frequency: Quarterly 5. No. of Issues Published Annually: 4 6. Annual Subscription Price: $12 7. Complete Mailing Address of Known Office of Publication: 170 120th Avenue NE Ste 101 Bldg E, Bellevue, Washington 98005-3051 Contact Person: Jeanette Kebede, Telephone: 425.586.1120 8. Complete Mailing Address of Headquarters or General Business Office of Publisher: Same as #7 9. Full Names and Complete Mailing Addresses of Publisher, Editor, and Managing Editor: Publisher: Washington Society of Certified Public Accountants, Editor: Jeanette Kebede, Managing Editor: n/a, Washington Society of Certified Public Accountants, 170 120th Avenue NE Ste 101 Bldg E, Bellevue, Washington 98005-3051. Owner: Washington Society of Certified Public Accountants, 170 120th Avenue NE Ste 101 Bldg E, Bellevue, Washington 98005-3051 11. Known Bondholders, Mortgagees, and Other Security Holders Owning or Holding 1 Percent or More of Total Amount of Bonds, Mortgages, or Other Securities: None 12. Tax Status Has Not Changed During Preceding 12 Months 13. Publication Name: The Washington CPA 14. Issue Date for Circulation Data Below: 07/17/2023 15.

Extent and Nature of Circulation (Avg. No. Copies Each Issue During Preceding 12 Months, Actual No. Copies of Single Issue Published Nearest to Filing Date). a. Total No. Copies (Net press run): 6,437, 6,650. b. Paid Circulation (By Mail and Outside the Mail): (1) Mailed Outside-County Paid Subscriptions Stated on PS Form 3541: 3,436, 3,424. (2) Mailed In-County Subscriptions Stated on PS Form 3541: 2,864, 3,065. (3) Paid Distribution Outside the Mail Including Sales through Dealers and Carriers, Street Vendors, Counter Sales, and Other Paid Distribution Outside USPS: 0, 0. (4) Paid Distribution by Other Classes of Mail Through the USPS (e.g., First-Class Mail®): 0, 0. c. Total Paid Distribution [Sum of 15b (1), (2), (3) and (4)]: 6,300, 6,489. d. Free or Nominal Rate Distribution (By Mail and Outside the Mail): (1) Free or Nominal Rate Outside-County Copies included on PS Form 3541: 42, 39. (2) Free or Nominal Rate In-County Copies included on PS Form 3541: 0, 0. (3) Free or Nominal Rate Copies Mailed at Other Classes Mailed Through the USPS: 39, 36. (4) Free or Nominal Rate Distribution Outside the Mail: 0, 0. e. Total Free or Nominal Rate Distribution (Sum of 15c and 15e): 81, 75. f. Total Distribution (Sum of 15c and e): 6,381, 6,564. g. Copies not Distributed: 56, 86. h. Total (Sum of 15f and g): 6,437, 6,650. i. Percent Paid: 98.73%, 98.86%. 16. Electronic Copy Circulation n/a 17. Publication of Statement of Ownership If the publication is a general publication, publication of this statement is required. Will be printed in the 10/16/2023 issue of this publication. 18. Signature and Title of Editor, Publisher, Business Manager, or Owner: Jeanette Kebede, Editor, Date 09/28/2023

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The Washington CPA Fall 2023

29

NOT-FOR-PROFIT

Talent Management Considerations for Nonprofits

culture? Monitoring the organization’s reputation online can be very helpful to ensure that the nonprofit is showing up on social media as a place where people want to be. Being aware of how your employees experience your organization’s culture is an important step when actively investing in your culture.

Laura White, PHR, SHRM-SCP

Employees may be attracted to an organization’s mission, but an authentic culture and a positive work environment will keep them there.

Over the past couple of years, many nonprofits have experienced challenges attracting and retaining talent.

3. Growth Opportunities and Feeling Valued

In a variety of nonprofit surveys conducted earlier this year, nonprofit leadership identified talent acquisition, performance management, and talent-focused technology as their top three priorities for 2023. For comparison, 2022 priorities focused on culture, learning and development, and performance management.

Outside of a competitive benefits package and competitive pay, employees place high importance on work-life balance, flexibility, and opportunities to learn and grow in their careers.

Emphasizing employees’ career paths will help ensure employees have meaningful opportunities at your organization without seeking growth outside your organization. In addition, continuous performance feedback and open and honest communication with their managers make employees feel valued.

To help manage the priorities and ongoing challenges of talent acquisition, performance management, and talent-focused technology, we offer below four approaches that nonprofit organizations can take to strengthen their talent management efforts:

1. Retention - Focus on Strategies to Keep Great Talent While recruiting and hiring new talent often becomes the focus for nonprofits, retention should not be overlooked. Given that it is difficult to find and attract experienced staff, once the organization does hire these highly talented performers, the focus should immediately turn to retaining them. Recent benchmarking data from the Society for Human Resources Management (SHRM) estimates the average cost to recruit an employee is $4,700. This amount does not include the average expense of benefits or “soft costs,” such as leaders’ and managers’ time invested in the hiring process or the costs to train new employees. In addition, turnover hurts productivity because it disrupts the flow of work. This can lead to emotional costs in the form of stress to remaining staff members, which could also cause them to consider leaving.

Focusing on areas such as fostering leadership and development and creating a positive, inclusive culture can greatly impact retention at an organization.

4. Technology - Investing in Systems that Support the Staff At the beginning of the pandemic, organizations had to pivot their resources to support remote work. This meant making adjustments, as well as investments, for communication and collaboration. As many nonprofits continue to operate in the hybrid space, with some remaining completely remote, continued investment in the technology to support these fully remote and hybrid work arrangements is essential. One way to do this is to automate HR systems and processes. Not only will this increase efficiency, but employees will appreciate the transparency and self-service features these systems offer.

In addition to investing in technology to make remote work and collaboration run smoothly, equally as important for nonprofits to focus on is how they can help employees and work teams build trust when people are not physically together as often. Such efforts can go a long way to helping retain valuable employees.

While nonprofits cannot predict future hiring trends, they can take concrete steps to strengthen their talent management efforts. Focusing those efforts equally on retention and recruiting will better position them to weather future hiring trends and become an employer of choice.

Laura White , PHR, SHRM-SCP, is HR Director, Managed Human Resources Services with Marcum LLP . Marcum’s Managed Human Resources Services Group has provided nearly every type of human resources support (day-today HR support to HR projects such as compensation benchmarking studies, HR assessments, FLSA classification analysis, and employee handbook reviews) for the last 22 years. You can contact Laura at Laura.

White@marcumllp.com.

2. Competitive Pay & Branding A solid compensation structure is a crucial element in retention and recruiting for nonprofits. The organization should be aware of industry competitive pay for their positions. We recommend benchmarking positions every three to four years, using internal staff or an outside consultant for a formal compensation benchmarking study.

Nonprofits should also ensure that their “brand” is a priority.

What is the reputation of the organization, and what is the

30

The Washington CPA Fall 2023

Learn More •

Register for the Not-For-Profit Conference at wscpa.org/nfpc23

•

Join the Not-For-Profit Resource Group wscpa.org/resourcegroup-committees

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