AZ CPA December 2019
We Are Jumping for Joy —
See Our New Brand/Logo! And a Sticker Inside for You! (see pg. 8) Blockchain—Stop Speculating, Start Gravitating Appraisal Review Procedures for Business Valuations
The Arizona Society of Certified Public Accountants y www.ascpa.com
AZ CPA DECEMBER 2019
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DECEMBER 2019 AZ CPA
CPA The Arizona Society of Certified Public Accountants President & CEO Editor
Make a Difference Today Give Back to the Profession
The Arizona CPA Foundation for Education and Innovation supports efforts to attract and retain the highest quality individuals to the accounting profession by enriching their educational and professional experience. You can make a difference in the profession and in the lives of these individuals as they start on the path to their accounting careers. Contributions to the Arizona CPA Foundation for Education and Innovation are tax deductible.
Cindie Hubiak Patricia Gannon Heidi Frei
Board of Directors Chair Jared Van Arsdale Chair-Elect Ginny DeSanto Secretary/Treasurer Tom Duensing Directors Rachael Bertrandt Keith Cowan Kelly Damron Paul Evans Ross Grainger Tim Hansen Jessica Iennarella Andrea Levy Anthony Lorenzo Vanessa Makridis Karen McCloskey Sami Raynes-Houseknecht Immediate Past Chair Mike Allen AICPA Council Members Rob Dubberly
Greg Nelson Chapter Presidents Southern Chapter Cathy Kinzer Northern Chapter James Shankland Southwest Chapter Helen Greenwell North-Central Chapter Gidget Schutte AZ CPA is published by the Arizona Society of Certified Public Accountants (ASCPA) to provide information, news and trends to the accounting profession. It is distributed 10 times a year as a regular service to ASCPA members. The ASCPA, its members, board of directors and administrative staff assume no responsibility for advertisements herein. The ASCPA and the above people also assume no liability for business decisions made by readers in reference to statements and/or claims in articles or advertisements within this publication. Opinions expressed by contributors are not necessarily those of the ASCPA.
Arizona Society of CPAs 4801 E. Washington St., Suite 180 Phoenix, AZ 85034-2040 Telephone (602) 252-4144 AZ Toll-Free (888) 237-0700 www.ascpa.com
AZ CPA DECEMBER 2019
Volume 35 Number 10
ASCPA Unveils New Logo and Brand Messaging The ASCPA kicks off its new branding efforts with the unveiling of a new logo and visits to members from the Swag Squad.
Columns & Departments Chairâ€™s Message by Jared Van Arsdale, CPA
A Dash of SALT by James G. Busby, Jr., CPA
Board Meeting Highlights
Scope of Appraisal Review Procedures for Business Valuations Better understand possible elements of the scope of work for a BV review. by Raymond Rath, ASA, CEIV, CFA
Blockchain: Stop Speculating, Start Gravitating Blockchain technology has arrived and itâ€™s coming faster than people and industries can keep up with. by Vincent LoRusso, CPA (in CA)
GASB Updates A sneak peek at the multitude of GASB updates to be presented at the Governmental Accounting Conference. by David R. Bean
4801 E. Washington St., Suite 180 Phoenix, Arizona 85034-2040 www.ascpa.com
DECEMBER 2019 AZ CPA
ASCPA Chair’s Message
A “Brand” New ASCPA I love Google dictionary and the word origin breakdowns it provides. I joke that it is often to correct my questionable grasp on the English language, but it is an incredibly convenient tool to quickly verify if your choice of wording is conveying the message you intend. Recently, I took a deep dive on the word “advocacy.” Starting with Google definitions and synonyms, I was quickly redirected to grammar websites managed by a university or online dictionary provider.
by Jared Van Arsdale, CPA
Encapsulating each iteration of the word and my understanding of its intent, the new brand promise of the ASCPA was reaffirmed to me as a spokesman, resource provider, protector and champion for the CPA profession in Arizona
AZ CPA DECEMBER 2019
My findings contained some nuance but were insightful. From the Old French, “avocat” was used to describe an attorney, a barrister or spokesman. From Latin origins, “advocatus” was for one to call to the aid of another or to be a pleader on one’s behalf. “Advocare” was commonly used to summon one as a witness or adviser. Lastly, the Middle English use was one who intercedes for another, such as a protector or champion. Encapsulating each iteration of the word and my understanding of its intent, the new brand promise of the ASCPA was reaffirmed to me as a spokesman, resource provider, protector and champion for the CPA profession in Arizona. This is deep-rooted in the ASCPA’s recent rebranding efforts. The new brand promise: The ASCPA advocates for the CPA profession and provides community to maximize members’ growth. The ASCPA is more than a quality education provider, more than a source of Arizona ethics and more than the accumulation of legislative victories. Collectively, the members of the ASCPA and its staff, are a community of professionals tasked with advocating for the best interest of the CPA profession to maximize the growth of its members. The ASCPA works with your regulator to ease oversight on the profession’s ability to adapt to the changing business environment including reciprocity and CPE mobility to and from other states. The ASCPA works with your legislators, state and federally, to maintain a stable, fair and simple tax code. The ASCPA works with experts to identify and generate an awareness of regulatory changes, future opportunities and possible risks to the CPA profession. As CPAs, we are essential to the execution of commerce daily as we represent our organizations and clients. How we individually support those recipients varies, our goals vary, our careers are unique to the environment and paths we choose. As such, the value that we each derive from the Society’s advocacy efforts will vary every year. However, it is indubitable that we are cared for by an advocate in every sense of the word. (Thank you to Google’s search engine to ensure I conveyed the intended use of the term “indubitable.”) l
Member News Grant Thornton LLP appointed Bradley J. Preber, CPA, as the firm’s CEO. John Baumer, the ASCPA’s new director of government relations, was recognized as one of the top young leaders in the government relations area by The Arizona Capitol Times. HeinfeldMeech announced that Jill A. Shaw, CPA, will be the next managing partner of the firm effective January 6, 2020. She will be succeeding Corey Arvizu, CPA, who has served in that role since 2012. After the transition, Arvizu will take on additional engagement responsibilities serving in both an audit and consulting services role.
2019 AICPA & CPA/SEA Leadership Conference: (L to R) , AICPA President Barry Melancon, ASCPA Chair-Elect Ginny DeSanto, AICPA Vice Chair Tracey Golden and ASCPA President & CEO Cindie Hubiak.
Two ASCPA members had their license plates included in a feature in the Journal of Accountancy: Victoria C. Harris, CPA, (license plate —Tax Gal) and Dr. Robert K. Minniti, CPA, (license plate — Dr CPA)! Dr. Robert K. Minniti, CPA, Jeffrey E. Beck, CPA, and Steven E. Bandler, CPA, were appointed to the Arizona Board of Accountancy’s Law Review Advisory Committee. Kristin S. Olsen, CPA, was promoted to tax manager and Erin M. Sparks, CPA, was promoted to audit manager, of Tull, Forsberg & Olson PLC. Aaron Blau, EA, CPA, was elected board chair of the East Valley Jewish Community Center. Blau’s involvement with the JCC started when he attended pre-school there. He has previously served as treasurer of the organization.
Henry+Horne Helps Beat World Record — At their community service event at the Phoenix Zoo, 82 Henry+Horne volunteers and their families helped raise funds and awareness by participating in the UMOM Walk to End Homelessness. The event totaled 1,942 walkers who were wearing their flip flops, beating last year’s World Record of 1,641. Also, Henry+Horne was named as one of the 2019 Best Midsize Accounting Firms to Work For, a project of Accounting Today and Best Companies Group.
DECEMBER 2019 AZ CPA
ASCPA Unveils New Logo and Brand Messaging The ASCPA has a new logo and promise to you. “As the ASCPA evolves, it is essential that we align our organization with all of the changes in the profession,” said President & CEO Cindie Hubiak. “This includes an increased focus in the advocacy area, which our members tell us is extremely important; providing new ways for members to connect virtually and in person; and providing a wide variety of educational options to enhance their growth.” We conducted research earlier this year to gain your feedback on the ASCPA’s logo and services. Members evaluated the logo to determine whether a change should be made. The majority of members communicated that it is time for a new ASCPA logo. Some of the wishes we heard for the new logo is that it be contemporary, technologydriven, speak to the future and represent moving forward. Supported by the leadership of the ASCPA board, we worked with an advertising agency, LAVIDGE, to assist us in developing a logo and image that represents the role of the association, along with brand messaging to communicate the value of membership to current and potential members. We collaborated with members from a variety of industries throughout the state to get their feedback throughout the design and messaging development. Messaging The new tagline and brand promise communicate the value of the ASCPA’s membership community. Tagline Your Connection to the CPA Profession Brand Promise The ASCPA advocates for the CPA profession and provides community to maximize members’ growth.
Photos: Members particpated throughout the process from establishing the brand to promoting the launch and receiving promotional items from our swag squad.
AZ CPA DECEMBER 2019
Our New Logo The ASCPA’s new logo incorporates the benefits of membership. It also displays our tagline and brand promise in a visual format. •
• • •
The dotted lines signify the variety of career paths available to you as a CPA and how the ASCPA supports your growth in moving forward. The intersections of the lines demonstrate the power of connections with other CPAs, governmental agencies and the business community. The colors represent Arizona with their Southwestern hue. The lowercase letters are more contemporary and denote a friendly organization. The bolded letters express our dedication to the CPA profession.
The new logo translates well in the digital world. You will also see an animated version of the logo on the website and video that expresses enthusiasm for the ASCPA and the CPA profession. The icon, which we have affectionately nicknamed the starburst, allows for other creative uses of the logo to attract attention. Brand in Action In addition to visuals and messaging, it is important that an organization lives up to its brand image and messaging. One example of the brand in action is our increased focus on advocacy. The Society hired a director of government relations to focus on advocacy initiatives that affect our members. “CPAs are impacted by actions by the Arizona State Board of Accountancy, by the Arizona Legislature and by Congress,” said Hubiak. “We are seeing activity in all of these areas at a much more frequent basis than we ever have before.” The Society also held its strategic planning session in November and set goals and objectives to align with our brand promise. We will continue to share how we are delivering on our brand promise and how you can make the most of your membership experience. l
DECEMBER 2019 AZ CPA
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A Dash of SALT
Arizona’s Wayfair Bill Compounds Burdens on Remote Sellers (Part Four) In this month’s state and local tax (SALT) column, in consultation with Professor Richard Pomp, Busby continues explaining how H.B. 2757, Arizona’s response to Wayfair, actually will compound the state’s burden on remote sellers even though it also will dramatically simplify the state’s overall sales tax structure. This is the fourth in a series of articles addressing Arizona’s response to the Wayfair decision. In this column, Busby will address potential remedial actions the state could take. Last month’s column explained how H.B. 2757 compounds the burden Arizona imposes on remote sellers because it requires so many more of them to comply with the state’s sourcing rules.
Other Burdens on Remote Sales into Arizona In addition to retaining its sourcing rules, Arizona has not simplified its sales tax structure in other key ways that may also make it difficult for the state to defend its new economic nexus thresholds against a constitutional challenge. While the Wayfair Court did not hold that states must adopt the Streamlined Sales and Use Tax Agreement in order to implement economic nexus standards, it explained that the SSUTA is important because it: • “standardizes taxes to reduce administrative and compliance costs;” • “requires a single, state level tax administration;” • “requires … uniform definitions of products and services;” • “requires … simplified tax rate structures;” • “requires … other uniform rules;” and • “provides sellers access to sales tax administration software paid for by the State” and that “[s]ellers who choose to use such software are immune from audit liability.” South Dakota adopted the SSUTA in order to simplify its sales tax system in all six of these key ways emphasized by the Court. Simplifying the state’s sales tax structure by moving to a single statewide retail sales tax base probably was the most important thing Arizona could have done to prepare itself to defend its new economic nexus thresholds against a constitutional challenge. But, because the state still has not implemented most of the key simplifications the Wayfair Court emphasized, it may not be able to defend its economic nexus rules. Comparing Arizona’s sales tax structure to South Dakota’s sales tax structure — the latter is the only sales tax structure to date that includes economic nexus thresholds that have withstood scrutiny by the Supreme Court — demonstrates that Arizona has not done nearly as much as South Dakota did to simplify its sales tax system. This is seen by contrasting Arizona’s sales tax structure with
by James G. Busby, Jr., CPA James G. Busby, Jr., CPA, is a state and local tax attorney at The Cavanagh Law Firm. Busby previously worked in the SALT departments at Arthur Andersen and Deloitte & Touche. Before entering private practice, Busby was in charge of all transaction privilege (sales) tax audits at the Arizona Department of Revenue. If you have any questions, please contact the author. He can be reached at (602) 322-4146 or JBusby@CavanaghLaw.com.
DECEMBER 2019 AZ CPA
the Court’s observations about South Dakota’s structure and the SSUTA. First, the SSUTA “standardizes taxes to reduce administrative and compliance costs.” By moving to a single state-wide retail sales tax base, Arizona dramatically simplified its sales tax structure. However, Arizona’s sales tax system is still different from the sales tax systems in effect in the 23 SSUTA states. Because Arizona imposes a transaction privilege tax rather than a true sales tax, it is unique among the 45 states that impose some form of
a sales tax. In that respect, Arizona has not standardized its taxes compared to other states. Second, SSUTA “requires a single, state level tax administration.” To its credit, by early 2017, the Arizona Department of Revenue was issuing all local sales tax licenses, overseeing all sales tax audits and processing all sales tax returns. At this point, Arizona seems to be on solid ground on this issue. Third, the SSUTA “requires … uniform definitions of products and ser-
October Board of Directors Meeting Highlights Among other actions at its October 16, 2019 meeting, the ASCPA Board of Directors reviewed the following: Consent Agenda The consent agenda, which included the board minutes, financial statements and investment policy, was approved. Report from the Life and Honorary Committee Mike Allen chaired the committee which included Mark Landy, Bruce Nordstrom, Peggy Ullmann and Cindie Hubiak. Julie Klewer was approved as life member by the board. Branding Update and Message Confirmation Heidi Frei provided an update on the ASCPA’s branding activities. The board confirmed the ASCPA brand language. Trends Report Observations The board reviewed the recently issued AICPA Trends Report (https://www.aicpa. org/content/dam/aicpa/interestareas/accountingeducation/newsandpublications/ downloadabledocuments/2019-trends-report.pdf). They discussed how that data and other items impact the ASCPA. Strategic Plan Update Cindie Hubiak provided an update on the ASCPA’s progress on its strategic measurements. A Day in the Life Rob Dubberly, Kelly Damron and Mike Allen each shared a view of the challenges and joys they experience in their life and job. If you have questions or would like additional information, please contact Cindie Hubiak at (602) 324-2888; AZ toll free at (888) 237-0700, ext. 203; or chubiak@ ascpa.com
AZ CPA DECEMBER 2019
vices.” As explained above, by moving to a single statewide retail sales tax base, Arizona dramatically simplified its sales tax structure, but its definitions are still different from the definitions in effect in the 23 states that have adopted the SSUTA. In that respect, Arizona’s definitions still are not uniform. Fourth, the SSUTA “requires ... simplified tax rate structures.” As explained in my last column, this probably is the most significant of the obstacles that remain for the state to address in order to survive remote vendor constitutional challenges. And the tiered rates in effect in many Arizona cities and towns, where purchases up to a certain amount are taxed at one rate while the remainder of the same transaction is taxed at a different rate, won’t help the state’s cause if it is forced to defend its system. If the state wants its economic nexus thresholds upheld, it should act quickly to simplify its sourcing and tax rate structures. Fifth, the SSUTA “requires … other uniform rules.” Once again, by moving to a single state-wide retail sales tax base, Arizona dramatically simplified its sales tax structure, but its rules still will be very different from the rules in the 23 SSUTA states. In that respect, Arizona’s rules still are not uniform. Finally, the SSUTA “provides sellers access to sales tax administration software paid for by the State,” and “sellers who choose to use such software are immune from audit liability.” Arizona does not provide sellers with access to free sales tax administration software or with immunity from audit liability for using such software. If Arizona is not going to adapt SSUTA — which would resolve the first, third and fifth points above — it should seriously consider offering free software to retailers to help them navigate the state’s unique sales tax system and provide immunity from audit liabilities for retailers that rely on it. If the software accounts for the Arizona municipalities’ complicated tiered rate structures, it may help mitigate the fourth point as well. l
Scope of Appraisal Review Procedures for Business Valuations by Raymond Rath, ASA, CEIV, CFA
Best practices for appraisal reviews of business valuations are evolving. Appraisal review for real estate lending has received significant attention from bank regulators for decades. With increased reliance on fair value estimates for financial reporting, the SEC and Public Company Accounting Oversight Board (“PCAOB”) expressed concerns about the quality of fair value estimates and the depth of appraisal review procedures of auditors and their valuation specialists. Many articles on BV review focus on technical issues. This article focuses on better understanding possible elements of the scope of work for a BV review. My focus is on reviews that express a conclusion pertaining to the reasonableness of the appraiser’s fair value estimate. While my comments focus on financial reporting, the scoping issues are relevant to BV reviews for other purposes. USPAP Insights The Uniform Standards of Professional Appraisal Practice (“USPAP”) promulgated by The Appraisal Foundation provides high-level guidance on the review process. USPAP guidance is principles and not rules based. USPAP guidance is generic and not by discipline or specific type of asset. USPAP notes the scope of work for a valuation and a review is a function of complexity of the asset and the use of the appraisal review. The valuation of Level One assets as set forth in ASC 820, Fair Value Measurements, is straightforward. The valuation of Level Three assets involves numerous often highly subjective assumptions. The scope of procedures for an appraisal review influence the quality of the review opinion. While a review that consists of simply reading an appraisal report and reacting to the information in the report is a form of limited scope review, this
DECEMBER 2019 AZ CPA
Business Valuation and Forensic & Litigation Services Conferences Dec. 18, 2019 ASCPA Learning Center or Webcast Get up to speed on considerations, methodologies and rulings on a variety of business valuation, forensic accounting and litigation services topics. Attend for a half day focusing on either subject, or stay for a full day of informative, progressive and dynamic sessions on both subjects from national and local speakers.
Morning Program — Forensic & Litigation Services 8 – 11:40 a.m. Tracing Tips in Forensic Accounting Engagements – A Panel Discussion Moderator: Melissa Loughlin-Sines, CPA, CFE, CVA, CFF Henry+Horne Panelists: David S. Cantor, CPA, Cantor Forensic Accounting, PLLC Kristina Cervone, Cordell & Cordell Julia A. Miessner, CPA, ABV, CFF, CGMA BeachFleischman PC Lunch Lessons: Breathing Confidence and Power into the Most Valuable Marketing Hour of Your Day Norm Hulcher, Hulcher & Hays, LLC Collaborative Law Process Michael Julifs, MBA, CFP, Fair Share Divorce Jennifer Moshier, Esq., Moshier Law Lost Profits and Interest Rates Rob Mroz, ASA, CBA, CVA, MBA, BDO USA, LLP
Afternoon Program — Business Valuation 12:40 - 4:30 p.m. Valuations and Family Law — A Panel Discussion Moderator: Melissa E. Loughlin-Sines, CPA, CFE, CVA, CFF, Henry+Horne Panelists: Jeffrey G. Pollitt , Jeffrey G. Pollitt, P.C. David Horowitz, May, Potenza, Baran, & Gillespie, P.C. Point and Counterpoint Mark R. Hughes, CPA, ABV, CFF, Gorman Consulting Group, LLC Brendan J. Kennedy, CPA, ABV, CFF, CVA, ASA, ATLAS CPAs & Advisors PLLC Appraisal Review Concepts Pertaining to Business Valuations Raymond Rath, ASA, CEIV, CFA, Globalview Advisors LLC A Curmudgeon Looks at the BV Profession Robert E. Kleeman, CPA, ABV, ASA, OnPointe Financial Valuation Group LLC
4:30 – 5:30 p.m. — Networking Power Hour With Robert E. Kleeman
Learn more at www.ascpa.com/bvfl19
AZ CPA DECEMBER 2019
set of procedures would not be viewed favorably in many situations. With the focus on confirming if a valuation estimate is reasonable, elements of a comprehensive review include: • Confirm appropriateness of valuation with use • Confirm key facts and data presented • Confirm methodologies • Confirm assumptions • Check the math • Express opinion on the value estimate Within each area, there are numerous procedures that are beyond the scope of this article to cover. USPAP Standards Rule 3-1 indicates that “In developing an appraisal review, the reviewer must: • Not commit a substantial error of omission or commission that significantly affects an appraisal review; and • Not render appraisal review services in a careless or negligent manner ...”
As the highest level of assurance, an audit typically is appropriate and often required for third-party reliance such as obtaining financing and credit. An audit is often required by potential outside investors or in advance of the sale of a business. In assessing these audit concepts and tying them to BV appraisal reviews, an appraisal review based on inquiry rather than verification should be viewed as a limited scope review. A full-scope
review would likely include procedures such as assessing third-party and other data in assessing management projections among other procedures. PCAOB Insights Guidance from the PCAOB helps us better understand an appraisal review. PCAOB inspections of audit firms have questioned the coordination of fair value reviews by audit teams and their valuation specialists (whether em-
Audit Insights CPAs recognize the differences between an audit and a review for financial statement preparation. The objectives of each are described in the AICPA’s Guide to Financial Statement Services: Compilation, Review and Audit published in 2015. “Review — To obtain limited assurance as a basis for reporting whether the CPA is aware of any material modifications ... primarily through the performance of inquiry and analytical procedures.” “Audit — To obtain reasonable assurance about whether the financial statements as a whole are free of material misstatement ... in all material respects ...” A financial statement review is substantially narrower in scope than an audit. A review does not contemplate obtaining an understanding of a business’s internal control; assessing fraud risk; testing accounting records through inspection, observation, outside confirmation or the examination of source documents or other procedures ordinarily performed in an audit.
DECEMBER 2019 AZ CPA
ployed by the audit firm or a third-party consultant). PCAOB inspection teams questioned the documentation of the agreement on the scope of work to be performed by the valuation specialist. PCAOB inspections indicate failure to agree in advance to a specific scope of work by the valuation reviewer is not a best practice. PCAOB reviews assess procedures performed by the assurance team and
the valuation reviewer, and coordination between the two groups. The goal is to conclude whether the total procedures performed provided an adequate basis to support the review conclusion. AS 2502 (AU 328): Auditing Fair Value Measurements and Disclosures was issued by the PCAOB to help auditors better address audits of fair value estimates. AS 2502 indicates substantive testing of fair value measurements
may involve: • Testing management’s significant assumptions, the valuation model and the underlying data • Developing independent fair value estimates • Reviewing subsequent events and transactions Mandatory Performance Framework Other resources available to help determine the scope of an appraisal review include the Mandatory Performance Framework and Application of Mandatory Performance Framework documents (collectively, the “MPF”). The MPF was issued by Corporate and Intangibles Valuation Organization, LLC, a not-for-profit entity owned by the AICPA, ASA and Royal Institute of Chartered Surveyors (“RICS”). The MPF are intended as guides to help preparers and reviewers of fair value estimates perform adequate procedures to support a valuation estimate. Many articles on BV review focus on technical issues. This article focuses on better understanding possible elements of the scope of work for a BV review. Recently, auditors’ opinions have started to include language like “We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.” A full-scope appraisal review report should contain similar language. For an appraisal review, an example might be, “We believe the appraisal review evidence obtained is sufficient and appropriate to provide a basis for our appraisal review opinion.” Reflection on this proposed language and the current level of procedures performed in many BV reviews may lead to expanded procedures by reviewers and a clearer communication of the scope of the BV review to users. l Raymond Rath, ASA, CEIV, CFA, is with Globalview Advisors LLC. He will be a speaker at the Business Valuation and Forensic & Litigation Services Conference on Dec. 18, 2019. See page 14 for more details.
AZ CPA DECEMBER 2019
Blockchain: Stop Speculating, Start Gravitating by Vince LoRusso, CPA (in CA) Imagine walking into a grocery store, going to the produce section and scanning a QR code on a mango with your smartphone to find in 2.2 seconds the exact origin of the mango, down to the crop, and seeing each event in that mango’s life from the moment it was a seed to the time it reached the store ... it sounds magical but it’s an opportunity with blockchain technology. Walmart completed a case study to support the ability to trace the origin of the mango in 2.2 seconds using a blockchain network compared to the seven days it took store managers with traditional systems, likely due to calling, emailing and waiting for other parties to check their own records and reply. What if we had such a quick tracking system when the romaine lettuce caused an E. Coli outbreak? Blockchain technology has arrived and it’s coming faster than people and industries can keep up with. The rush is evident because Walmart has mandated their leafy green vendors to be on their blockchain network sometime in 2020 and they’ve expanded tracking other products on the block. Are farmers ready to use blockchain though? All it takes is an Internet connection. Who administers and accepts risk for the blockchain network, security and controls and transactional data maintained on each block ledger? The Walmart example is a sliver of the potential blockchain technology can bring to the world. Supply chain management is a great use of the technology, and now we see other ways the technology is being applied, such as tokenizing securities and assets (e.g. the sale of private securities in real estate, fine art and
venture capital), tracking intellectual property, identity management and settling payments. Traditionally, multiple parties involved in a business transaction each have an independent ledger where they log transactional details and events. Reconciling data and verifying what occurred from one party to another can be a headache! We spend a lot of time reconciling information with customers or suppliers. The elements of blockchain bring multiple parties involved in a business process, such as a buyer, seller, third-party logistics, banks and other intermediaries, together onto one system in a highly secured and encrypted way, and they log transaction activity to a shared ledger establishing a single source of truth, consensus around each transaction, real-time tracking of assets, verification of ownership and other benefits with transparency gained overall for each party involved. Consider this analogy: before we had email, to deliver a message to another person an individual had to write a letter on a piece of paper, stuff it in an envelope, stamp it and hand it off to a postal carrier or plop it into a mailbox. The postal carrier then takes the letter to the post office where it gets sorted by other humans and then shipped to its respective location by plane, truck and another postal carrier. Eventually, the letter was received by the recipient. The Internet enabled the individual to deliver the same message instantly to their recipient without the need for such intermediaries. The Internet digitalized communication. Blockchain technology digitalizes the tracking and transfer of ownership or value by reducing reliance on intermediaries that are typically needed for establishing trust in a transaction, verification or other compliance requirements of a business transaction and it establishes a direct channel with a distributed ledger between the buyer, supplier and intermediaries (or issuer and investor in the case for securities). Did most people understand what the Internet was and how it could be used
DECEMBER 2019 AZ CPA
Accounting and Assurance Conference Jan.16, 2020 8 – 4:30 p.m.; 4:30 – 5:30 p.m. Networking Available In-Person or via Webcast Recommended CPE Credit: 8 hours Topics: Current Economic Conditions and Advancing the State’s Economy Jim Rounds, Rounds Consulting Group Fraud Detection and Prevention Mike David Schulstad, CPA, CFF, CGMA, FBI (ret.), CliftonLarsonAllen The Arizona Legislature, Legislation Impacting the Profession & the 2020 Election Cycle Ryan DeMenna, DeMenna Public Affairs Roundtables with Ryan DeMenna and Arizona Society of CPAs Keeping Up to Date With Key Accounting Standards Adam C. Bowman, CPA, Moss Adams Engage with Blockchain: An Interactive Learning Experience Vincent Michael LoRusso, CPA, TrueUp.co Arizona State Board of Accountancy Update Monica Petersen, Arizona State Board of Accountancy **Bonus Session and Networking Opportunity** Succession Planning – Now What? Richard L. Joliet, CPA, Richard L. Joliet CPA PLLC
Learn more at www.ascpa.com/aac20 18
AZ CPA DECEMBER 2019
in the early 1990s? No, but look what happened. Do most people understand what blockchain technology is and how it can be applied to business in 2019? No, but let’s learn and explore how this technology can be applied. The pace at which blockchain technology has hit the market is beyond the pace in which the general population, including business professionals, have been educated about exactly how the technology works and how it impacts business processes. Software engineers and their love for building new technology has challenged business professionals’ ability to keep up. The upcoming, live and interactive, blockchain session at the ASCPA Accounting and Assurance Conference is a great opportunity to learn and get the translation from an experienced CPA on why blockchain is poised to have a significant impact on our profession and what you and your firm can do to prepare for the blockchain bonanza. The session will include a click-through simulation that shows tracking product from origin-to-store in a traditional manner and then the same transaction in a blockchain environment and we’ll have a game for you to qualify a blockchain use case for a client as well. Come learn and future-proof your business. l Vincent Michael LoRusso, CPA (in CA), CEO and coufoundeer of TrueUp. After a decade of experience, coming from a Big 4 firm, and specializing in areas of audit, financial reporting in the private sector and consulting for a variety of industries and company sizes, LoRusso brings skill validation and progression through skill-based challenges for all accounting, finance and audit professionals. He will speak about blockchain at the Accounting and Assurance Conference on Jan 16.
GASB Updates by David R. Bean Those that attend an update that addresses the activities of the Governmental Accounting Standards Board (GASB) approach the session with any number of different expectations. Expectations can range from what is the GASB doing to me now, or what will it be doing to me in the future, to what nuggets of information can I glean from the presentation that will help me prepare for the implementation of new standards or comment on a GASB due process document? So, whether you believe the GASB is doing something to you or for you, this article will provide a sneak peek at the upcoming GASB Update session, which is part of the Arizona Society of CPAs Governmental Accounting Conference that will be held on February 5, 2020. The GASB Update session is intended to provide an overview of recently issued standards and projects that the Board currently is deliberating. A representative from the GASB has presented at every ASCPA Governmental Accounting Conference since its inception, and I have had the honor of participating as a presenter at the conference for almost 25 years. The ASCPA Governmental Accounting Conference also was a favorite of the GASBâ€™s first chairman, Jim Antonio. When Antonio retired from the Board in 1995, Jaimie Soulvie and the conference committee had asked me for most of the intervening years to make this presentation. Over those years, both the conference and I have grown. Like Jim Antonio, this conference is a favorite of mine with attentive audiences, but more importantly, great people. I just wish that there was space to give shout outs to all of my Arizona friends and colleagues. As previously noted, the GASB Update normally covers a range of topics. This yearâ€™s session continues that format by including a variety of standards and projects, including two important implementation guides that are associated with the new fiduciary activities and leases standards. The key thing to remember about implementation guides is that they are generally accepted accounting principles
(GAAP). In addition to those guides, the session also will highlight the 2020 Implementation Guide Update, with additional questions and answers on fiduciary activities and leases. As the relationship between the financial reporting entity standards (specifically, fiduciary component units) and the fiduciary activities standards continues to be explored by the GASB, questions that have been buried away for almost 30 years are now being asked and answered with authoritative guidance. Those questions and answers are essential tools in the GAAP hierarchy, whether presented in stand-alone guides or as part of an annual update, that will assist with the implementation of GASB standards. The fiduciary activities and leases standards clearly are significant standards. In fact, the new leases standards will be the subject of a stand-alone session at the conference. However, they are far from the only new standards that the Board has issued that have not been fully implemented by most Arizona governments. Other recently released or soon to be released standards that will be touched upon during the GASB Update session including conduit debt, public-private partnerships (PPPs), and subscription-based information technology arrangements (SBITAs). Conduit debt has not been spotlighted from a GAAP standards-setting perspective for almost 25 years. Although note disclosures, at a minimum, are currently required for conduit debt, those disclosure requirements often drop below the radar for many governments. With the new Statement, conduit debt is once again front and center. The new leases standards highlighted the need to update the GASB pronouncements on service concession arrangements and focus on issues like cloud computing. As the GASB was addressing those issues, providing guidance for the broader subjects of PPPs and SBITAs just made sense. Time will not permit an in-depth review of those Statements, but key features, including identifying critical characteristics that may be buried away in those arrangements, will be highlighted.
DECEMBER 2019 AZ CPA
No GASB Update is complete without a brief overview of what is coming down the pike—especially for those that may be setting retirement dates. The GASB is now reexamining three standards that have served as the foundation of governmental accounting and financial reporting for the past 30 years. Those reexamination projects will produce three due process documents in 2020 that likely will set the course of governmental accounting and financial reporting for the next 30 years. The comprehensive project that is closest to the finish line is the financial reporting model. The Board has been
refining its proposals for the measurement focus and basis of accounting for governmental funds that is scheduled to be released as an Exposure Draft for public comment in June 2020. Not to be outshined, the Board also has been making progress on the revenue and expense recognition project. This comprehensive project not only reexamines nonexchange revenue and expense standards, but it also takes on many important transactions that currently are referred to as exchange revenues and expenses. To say that this project and its forthcoming Preliminary Views is worth following could be con-
Governmental Accounting Conference Feb. 5, 2020
Desert Willow Conference Center — 8 a.m. – 4:30 p.m. Available In-Person or via Webcast Recommended CPE Credit: 8 hours Hear the latest on GASB; learn more about change management, fraud detection and cybersecurity; and participate in cyber warfare bootcamp at the 2020 ASCPA Governmental Accounting Conference. Your favorite speakers, including David Cotton, Marianne Jennings and David Bean, are back, along with other local and national experts to assist you in discovering insights and understanding on new developments in governmental accounting and auditing. Special thanks to Platinum Sponsor
Learn more at www.ascpa.com/gac20
AZ CPA DECEMBER 2019
sidered a monumental understatement. Finally, conference attendees will get a glimpse of the first due process step in reexamining the disclosure framework—an Exposure Draft that is scheduled to be released at the end of February 2020. This project is reexamining the role of note disclosures as a communication method and will better answer what is an essential disclosure. Those concepts will then be used by the GASB to not only reexamine current disclosure requirements but also establish new disclosures in the future. As Arizona governments are now facing the implementation of the new leases standards, devoting a stand-alone session to this topic certainly is timely. As governments continue to delve into their lease agreements, questions continue to be raised on a number of fronts. As a result, the stand-alone session not only will address the recognition and measurement basics but also will take a deeper dive into issues such as the determination of a lease term, how to select a discount rate, and how far a government needs to go in identifying nonlease components. I truly look forward to presenting the GASB Update and the Leases Session at this year’s conference. l David R. Bean is the director of research and technical activities for the Governmental Accounting Standards Board (GASB). He assigns and provides oversight to the GASB’s research, technical, and administrative activities. Prior to joining the GASB in 1990, David worked in public accounting and government. He also has served as Deputy Chairman of the International Public Sector Accounting Standards Board (IPSASB). He was the lead author on the 1988 Governmental Accounting, Auditing and Financial Reporting and was the founder of the GAAFR Review. He was the last director of the National Council on Governmental Accounting before the formation of the GASB.
AZ CPA Quick Quiz You’ve Read It, Now Get Credit Take this quiz on AZ CPA content online or submit this hard copy. Receive a score of 70 percent or more and earn one hour of CPE credit in specialized knowledge. It’s that easy! Fees: Members: $25 Nonmembers: $40 Online Access Go to www.ascpa.com/quickquiz to access links to all active quizzes. Once a quiz is purchased, a link and password will be emailed to you. Your results will be sent immediately after completion, and certificates are emailed within two business days. Hard Copy Please select one answer for each question. Fill out registration/payment information below and mail or fax to the Society office. Quiz results and certificates will be emailed to the address provided on the registration form. *This quiz will be available until December 2020. Please note that users have three attempts to pass the quiz with at least a 70 percent score.
December 2019 Issue of AZ CPA* 1. In this month’s Chair’s message, what word does Van Arsdale investigate? m Community m Advocacy m Strategiary 2. The ASCPA’s new brand promise is: The ASCPA advocates for the CPA profession and provides community to maximize members’ growth. m True m False 3. The ASCPA’s new branding efforts were a result of: m A survey of members who recommended it m The work of the staff, ASCPA board and members from a variety of industries m All of the above 4. As mentioned in the Wayfair article, what state’s sales tax structure addressed all economic nexus thresholds withstanding scrutiny by the Supreme Court? m Nevada m South Dakota m New York
7. AS 2502 (SU 328) Auditing Fair Value Measurements and Disclosures was issued by the PCAOB to help better address audits of: m Fair value estimates m Fine art businesses m The Royal Institute of Chartered Surveyors 8. Blockchain can be used in many ways, but one of the situations not listed in the article was: m Tracking food from grower to shelf to find the exact origin of a mango m Helping to stop an E.Coli outbreak m Helping farmers track the weather
5. Arizona imposes a transaction privilege tax rather than a true sales tax. m True m False
9. Blockchain growth was compared to: m The invention of the printing press m Cars replacing the horse and buggy m Email replacing regular mail
6. A financial statement review is ... m much wider in scope than an audit m substantially narrower in scope than an audit m about the same scope as an audit
10. The acronym SBITAs stands for: m Standard bitcoin individual transaction acceptance m Subscription-based information technology arrangements m Standardizing blockchain in technology advances
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DECEMBER 2019 AZ CPA
Classifieds Business Opportunities $430K FOUNTAIN HILLS, AZ TAX AND ACCOUNTING PRACTICE FOR SALE — Fountain Hills 26+ years tax and accounting practice for sale. Fees for tax prep 70% and accounting, payroll and bookkeeping 30%. No audits, reviews or management fees. Would like to complete the sale in 2019 with a May 31, 2020 transition date. Owner will help transition and flexible on the deal structure. Contact firstname.lastname@example.org. BOOKKEEPING FIRM Looking to Acquire Bookkeeping Clients - Tucson Bookkeeping firm is looking to acquire bookkeeping clients. Please contact Lance at (520) 245-0372 or by email at email@example.com. COTTONWOOD, AZ BUSINESS OPPORTUNITY — Cottonwood, AZ
– Small town lifestyle close to Sedona. Thought of ditching the big city? Slower lifestyle? Call me to discuss possibilities. I’m 60 and have thoughts of either changing occupations or downsizing my current CPA practice. I’m still in that “checking it out” mode so I’m also open to other options. The demand for quality tax and accounting services in this area is large compared to the available CPAs. My current full-time senior accountant needs more work — but I’m maxed out creating an imbalance. Call me (928) 202-4222 or send an email scott@KinzeyCPA.com. TAX AND ACCOUNTING PRACTICE FOR SALE — Tax and Accounting Practice for sale in North Phoenix. Gross revenue 160,000. Owner will help transaction, can be flexible on deal structure and is looking to sell this year. Please contact: firstname.lastname@example.org.
CPEvening: Eat, Drink and Be Educated Jan 30, 2020 Blanco’s Tacos — 5:30 – 8 p.m. 2502 E Camelback Rd., Ste 122, Phoenix, AZ 85016
Sponsored by Enterprise Bank & Trust CPEvening combines fun and CPE in a relaxed atmosphere. Make quality connections and grow sustainable and meaningful relationships. The Art of Successfully Working With Different Personality Traits — presented by Jessica Iennarella Learn how to more effectively utilize the personality traits inherent in the people with whom you most closely interact. Gain awareness of the benefits and pitfalls of these traits and learn how to identify and best work with them. Meet some of your colleagues from organizations in the Phoenix area and engage in great conversation. We will be providing appetizers and one drink ticket with your registration. A cash bar will be available. 5:30 p.m. Registration and Networking 6:30 - 7:30 p.m. Presentation 7:30 - 8 p.m. Networking
AZ CPA DECEMBER 2019
Employment FULL-TIME OR PART-TIME AUDIT ASSOCIATE/SENIOR — GREAT W/L BALANCE AND BENEFITS — Barry & Moore, CPAs —Successful, low-stress CPA firm seeking a CPA (licensed or in process) for audit with the option for some tax. We offer PTO plus banked overtime, flexible schedules, competitive salaries and bonuses, professional dues, CPE, pension plan. Send resume to email@example.com. JBROOKS WEALTH ADVISORS PC — Annual tax seasons. Looking for long term working relationship! Must have excellent verbal and input skills. Great small office to work at. Flexible hours. Interview and prepare returns 1040 & business returns. 32nd Street Camelback Rd. firstname.lastname@example.org. TAX MANAGER AND STAFF — CPA — Tucson CPA firm has full and parttime positions available for CPAs with a minimum of five years of recent CPA firm experience preparing and reviewing business and individual tax returns. Opportunities for partnership are also available. We offer competitive salaries and benefits, including tax season bonuses, group health insurance, 401(k) with a 4% company contribution, paid holidays, vacation and complete reimbursement of all CPA related expenses. Please apply for the Tax Manager or Tax Staff opportunities today, by sending your resume and salary requirements to email@example.com. Office Space EXECUTIVE OFFICE SPACES FOR LEASE — Beautiful garden-style office complex in a great office environment located in north Phoenix. Easy access to SR 51 and SR 101 just north of Tatum and Shea Blvd. Executive office $800, interior office $650. Ample parking, beautiful conference rooms, seminar room and copier, telephone and internet ready. Includes Receptionist to greet your clients. Contact Julie at (602) 953-5000.
ax Guide Arizona T Tax Guide ona Income Guide 2020 Ariz & Use Tax de ona Sales ty Tax Gui 2020 Ariz al Proper ty Guide ona Person per Ariz Pro 0 ed 202 Set ona Unclaim 4-Volume 2020 Ariz r ger, Partne Pat Derden Rodis, CPA Stephen J. lars, CPA Zol Edward K.
na Society by the Arizo Published Workshop Phoenix Tax
2020 Arizona Tax Guide
Order the only comprehensive guide on Arizona taxes. Authors: Pat Derdenger, Steve Rodis and Ed Zollars New in the 2020 Arizona Tax Guide: • Details of Arizona law changes to reflect conformity with changes made in the 2017 Tax Cuts and Jobs Act • MRRA changes to the alteration limitations and exclusion of contractors not required to be licensed by the Registrar of Contractors from the prime contracting classification • Option to bypass OAH and appeal directly to the state board of tax appeals or the tax court • Required registration with the DOR for online lodging marketplaces The Arizona Tax Guide includes the following guides: • The Arizona Income Tax Guide is a comprehensive reference that highlights the differences between Arizona and Federal income tax law and provides references to the Arizona Revised Statutes for a more in-depth analysis. It highlights the differences between individual, corporate, partnership and trust taxes, includes tax tables, and is arranged in a way that facilitates research on any topic. • The Arizona Sales and Use Tax Guide is a resource for anyone preparing or filing city sales and use tax returns. The guide details the various sales tax classifications, exemptions, deductions and rates as well as compliance, audits, refund claims and administrative appeals. • The Arizona Personal Property Tax Guide provides an overview of Arizona’s personal property tax system, including exemptions, the classification structure and assessment rates, reporting, valuation and appeals. • The Arizona Unclaimed Property Guide explains what unclaimed property is, reporting requirements for holders of unclaimed property, how owners of unclaimed property can claim their property and audits.
Spiral-Bound Book: Pre-Order by Dec. 16, 2019 r Members of ASCPA, Phoenix Tax Workshop, State Bar of Arizona or Enrolled Agents: $85
r Nonmembers: $105 After Dec. 16, 2019 r Members of ASCPA, Phoenix Tax Workshop, State Bar of Arizona or Enrolled Agents: $95
r Nonmembers: $115 Electronic PDF:
r Members of ASCPA,
Phoenix Tax Workshop, State Bar of Arizona or Enrolled Agents: $79
r Nonmembers: $99 Guides will be available for delivery mid-January 2020.
Order online and learn more about the guides at www.ascpa.com/taxguide2020
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DECEMBER 2019 AZ CPA
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AZ CPA DECEMBER 2019
The official publication of the Arizona Society of CPAs.