AZICPA September 2026
Upcoming Fall Events Seven In Person Events I Three Online Events
Legislative Session Recap Legislative Wins by Emily Webb It’s All About Trust by Ryan DeMenna PAC Recognition
CPAs Share Articles, vacation photos, book reviews and more.
The Arizona Society of Certified Public Accountants y www.ascpa.com
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AZICPA The Arizona Society of Certified Public Accountants President & CEO Editor
Oliver Yandle Rosa Hernandez
Advertising
Jodi Corrales
Board of Directors Joe Heidleburg Lisa Parke Jessica Iennarella Aaron Blau Anne Helgeson Coulson Painter Gabe Doak Helen Stewart Kat O’Connor Malia James Nate Eggman Sarah Lauzon-Jones Scott Mills Tyler Bigler Wesley Benally Immediate Past Chair Eugene Park AICPA Council Members Kelly Damron Tom Duensing Chair Chair-Elect Secretary/Treasurer Directors
AZ CPA Editorial Committee
Alli Byrne, Andrea Levy, Ashlea Perron Jennifer Greening, Mike Nyman Ted Bartlett 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 six times a year as a benefit 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 410 N. 44th St. Ste 205 Phoenix, AZ 85008 Telephone (602) 252-4144 AZ Toll-Free (888) 237-0700 www.ascpa.com
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AZ CPA SEPTEMBER 2026
AZICPA Volume 42 Number 3
September 2026
Features
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Upcoming Fall Events Legislative Session Recap CPAs Share
By Andrea Beth Levy, CPA, CFE, CGMA, MBA
12 T hank You to Our PAC Contributors All About Trust 13 IByt’sRyan DeMenna, Partner at DeMenna
Columns & Departments
Public Affairs
Chair’s Message by Joseph L. Heidleburg, CPA
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Member News
7
Quick Quiz
7
Book Review by Jennifer Greening, CPA
It’s Not Accounting Noise: Going Concern in the Nonprofit Space
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16 2026 Legislative Wins here Does AI Belong in Your 19 WSOC 2 Internal Controls Framework? By Michael S. Nyman, CPA, CISA, CISSP, CITP, CRISC
Equity: A CFO’s Perspective 23 PByrivate Ted Bartlett
26 Future CPAs: Scholarship Winnersr Turning Points 29 Internship By Rosa Hernandez of Hiring Too Fast 33 TByheKeriCost Ohlrich, PhD hat Every CPA Should Know About 37 WAmerica’s Audited Annual Report 410 N. 44th St. Ste 205 Phoenix, AZ 85008 www.ascpa.com
By Michael G. Doorley, CPA (NY)
42 The ASCPA Happenings: A Recap SEPTEMBER 2026 AZ CPA
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ASCPA Chair’s Message
Joseph L. Heidleburg, CPA Chair, Arizona Society of CPAs International Accounting Manager Align Technology, Inc.
I am currently writing this article during another hot summer in Arizona, yet I want to talk about a topic which is the theme of autumn, change. Currently, I am in a season of change in my role. This year, we had a few longterm employees leave the organization and a few director level individuals join. As a result, our team has been directed to look at process improvement. While continuously improving processes is nothing new for corporate accounting teams, the combination of events led to deeper questions such as: what risk does this control actually mitigate? Is there a more efficient way of performing the control? What does this business partner actually need to see? How can we best document this process to satisfy the auditors and our team? After nearly five years in this role with relatively little change in our core processes, it’s fascinating to see my team energized with new ideas. As my team has been dealing with change within our organization, I’m also struck by change occurring throughout the profession as a whole. In May, I attended the American Institute of CPAs (AICPA)’s Spring Council, which provided attendees with several updates. We discussed a couple of topics that impact early talent. Competency-Based Experience Pathway, which gives an alternative experience-based pathway to become a CPA, has now passed in over 40 states. These changes should reshape the accounting talent pipeline for years to come, creating new opportunities for aspiring CPAs while challenging employers and educators to rethink how professional competencies are developed. Then there’s AI. AI is changing what is expected from early talent at accounting firms. Tasks typically performed by first or second-year associates are now being replaced by AI. The challenge facing the profession is ensuring that efficiency gains do not come at the expense of the judgment and analytical skills traditionally developed during those early years of a CPA. Another topic discussed at the AICPA Spring Council, was the Securities and Exchange Commission is considering changes to reporting requirements for public companies that would allow semi-annual rather than quarterly reporting. The change may not only help reduce the burden of reporting for current companies, but it may allow more companies to potentially go public. Change is happening everywhere in accounting, including at the local level. With tax conformity passing in Arizona and the One Big Beautiful Bill Act, federal and state funding, and giving has shifted for individuals, businesses and especially nonprofits. As a result, we’ve seen a loss of programs. For our own Society, there is a recognition that the business model of the ASCPA needs to continue to grow. Within the last couple of years, the ASCPA has created new events such as the Women’s Collective and Not-for-Profit Mixer. Later this year, the Society will host CPE Giveback on November 10 and Attorneys, Bankers and CPAs Networking Event on November 18. The goal is to provide more diverse opportunities to engage the CPA community in Arizona. I urge all members of the ASCPA to register for these events, and please, provide your feedback and suggestions on how we can continue to serve the Arizona community and our membership base. As I serve as chair this year, the quote that remains at the front of my mind is, “The only constant in life is change.” Whether it is within our organizations, throughout the profession or within our Society, change creates opportunities to improve, innovate and strengthen what comes next. I look forward to seeing how we continue to evolve together and shape the future of our profession. l
Best Wishes, Joe Heidleburg
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AZ CPA SEPTEMBER 2026
Staff & Member News Eide Bailly ranked #10 on Vault’s 2027 Top Accounting Firms List. Four Leaf Financial & Accounting and NPO Accountants have merged into Four Leaf Accounting, serving nonprofits with non-attest accounting services. Heinfeld, Meech & Co. promoted Emily Skibitsky, CPA, MBA, to Staff Associate II. Heinfeld, Meech & Co. promoted Kristen M. Conway, CPA, and James Shankland, CPA, to Partner. Heinfeld, Meech & Co. promoted Scott Linh Tang, CPA, and Nolen Michael Cook, CPA, to Audit Manager.
Help your clients maximize their 2026 tax credits!
TAKE THE CREDIT FOR EDUCATION
C corps, S corps, LLCs and insurance companies can take Arizona’s dollar-for-dollar corporate tax credit through the JTO and provide need-based scholarships. Visit JewishTuition.org or call for information on the corporate tax credit. FOR INDIVIDUAL TAXPAYERS YEAR 2026 $1,571 / individuals $3,131 / married couples
480.634.4926 | JewishTuition.org | info@JewishTuition.org The Jewish Tuition Organization (JTO) is a certified school tuition organization (STO)
If you would like your news highlighted in the next issue of the ASCPA magazine, please submit member news to advertise@ascpa.com by September 30.
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It’s Not Accounting Noise: Going Concern in the Nonprofit Space By Andrea Beth Levy, CPA, CFE, CGMA, MBA
Continuing operations in a space of substantial doubt: going concern disclosures in a nonprofit environment. Going concern is not a bookkeeping error, a distant accounting term, or “accounting noise”. A going concern disclosure is serious business. It serves as a formal signal raising substantial doubt about whether the organization will remain open and can keep up with financial obligations 12 months after financial statements are issued. Continued on next page...
SEPTEMBER 2026 AZ CPA
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As mentioned by Jan McDaid, partner of the Han Group, “nonprofits face increased scrutiny around their financial health, especially in periods of economic uncertainty.” The going concern disclosure can have real consequences: funders may ask additional questions, future awards may be affected and board members may become uncomfortable with the organization’s financial position. On the flip side, auditors must remain independent and undergo peer review, which can increase the time and cost of the audit, adding additional pressure in an already pressurized environment, essentially adding fuel to the fire.
Ongoing monitoring creates proactive leadership If your nonprofit is facing financial uncertainty, the priority is to respond with a disciplined, documented plan. Management should be prepared to explain the root causes of the liquidity issue, show how cash will be managed, communicate clearly with the board and auditors, and identify the actions being taken to stabilize the organization. Cash planning “days-in-cash” report: Start with a quick “days-incash” treasury report. Calculate daysin-cash by dividing funds available for expenses by average monthly costs — a quarterly average can smooth unusual activity while staying current. Prepare and distribute the report weekly to management and executive leaders. The goal is guidance, not perfect precision. Protect payroll and near-term obligations: If there is concern about funding payroll, prepare a 13-week cash projection. Identify when shortterm or long-term investments may need to be used, confirm compliance with reserve policies, and prioritize employees’ pay and reimbursable expenses before slowing vendor payments. The goal is to understand exactly when cash pressure becomes urgent and what decisions must be made before that point.
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AZ CPA SEPTEMBER 2026
Monthly rolling forecasts, creating a strategy to move forward: Create a monthly forecast that begins with expected donor payments, program service fees, grant receipts, financing activity, payroll and operating expenses. Remove non-cash items such as depreciation and amortization, so the forecast reflects cash movement. A simple structure starts with beginning cash, plus incoming program service fees, donor payments, and financing activity, less payroll and operating expenses, equaling ending cash. This forecast should be supported by realistic assumptions and updated as new information becomes available. Distribute to management and board accordingly. Intentional cost containment: What’s your current “burn” rate? The burn rate is how quickly you spend cash. Review expenses by fixed and variable cost categories, list significant vendor agreement terms and identify areas where spending can be reduced without immediately compromising mission delivery. Potential actions may include reducing software licenses, limiting conference travel, pausing nonessential events and projects, renegotiating vendor payment terms, freezing open roles, using contractors only when necessary and evaluating employee bonuses during periods of financial unrest. Use caution with personnel decisions: Before considering reductions in force, evaluate temporary alternatives such as furloughs, salary reductions, hiring freezes or reduced hours. Terminations should be treated as a last-resort action after leadership has considered the financial, operational, legal and mission-related impact. If the company takes this route, continue to keep confidential information secret. Work with Human Resources and consider speaking to your public relations team for a statement. Do not stray from the truth or lie to employees, doing so can eliminate their loyalty and trust, not to mention your reputation.
Know your own limits and when it’s time for a break. The organization needs your competence, but it also needs your clarity and humanity intact. Build simple rituals around difficult work: take a short walk before or after emotionally heavy tasks, such as preparing final payroll for departing employees. Communication: Management should be ready to provide auditors with a clear analysis of the conditions causing doubt, the organization’s plans to address those conditions and evidence supporting the feasibility of those plans. This may include cash forecasts, bank communications, donor commitments, vendor arrangements, board-approved plans or scenario analyses. The board should receive regular updates clearly stating the financial reality, the disclosure’s implications and the decisions required to move forward. Can penguins fly? Penguins may have wings, but they cannot fly, no matter how hard they try. This same concept may apply to your work. It is easy to fall into the sunk-cost trap of believing that doing more will fix the problem, but sometimes it’s not true. More research, more reports or more detailed financials may not solve a liquidity issue. When economic conditions drastically change, the better response may be to accept the current reality instead of doing more. If you are being asked to spend significant time preparing detailed reports that lead to the same conclusion (cash runs out in six weeks), try to answer strategy questions without placing significant strain on yourself. In some cases, the organization needs diverse revenue structures or liquidity, not another version of the same financial report with different headings. As CPAs and business leaders, it may be easier for us to step back and identify the changes needed: where spending should decrease and where revenue should diversify. However, those recommendations may be difficult for leaders to hear, especially
if you have been consistently raising these concerns. We may see that grant funding worked in the past, but that the organization now needs to move toward a fee-for-service model. We may also notice that grant budgets underestimate the true cost of running the business and repeatedly underfund administrative departments or that hiring is accelerating without a sustainable revenue model. Remember, unless you are serving as the CEO or COO, your job is to partner with executive leaders and accept their decisionmaking process.
Final Thoughts Leadership during financial uncertainty is not only a technical exercise — it is a test of presence, judgment and personal steadiness. The data matters, but so does the condition of the person reporting the results. When people feel afraid, they may become reactive,
impatient, accusatory or irrational. Upset can move through a room quickly and financial leaders are often standing at the center of it. Chronic stress will literally rewire the circuits in your brain. If you are stuck in an unhealthy work environment and find yourself under significant pressure, you may be at risk of developing a short fuse. This sustained level of fear and stress experienced day in and day out depletes your emotional resources, making it probable to get mad at even minor incidents. The work is to notice the fear without absorbing it, to hear the urgency without becoming frantic and to respond to pressure without taking on the emotional chaos around you. Self-care in this context is not indulgence; it is a boundary, a discipline and a requirement for sustainable action. A steady financial leader can listen carefully, explain the truth plainly, protect confidential
information, and make difficult decisions without becoming harsh or defensive. During these periods, build recovery into the operating plan; sleep, step away regularly, eat regularly, seek wise counsel, and allow moments of stillness before making consequential decisions. l Andrea Beth Levy, CPA, CFE, CGMA, MBA, is the head of finance & operations with the Greater Phoenix Chamber. Levy currently serves on the ASCPA’s editorial committee and is an audit committee member of the Institute of Internal Auditors Phoenix Chapter. You can connect with her at linkedin.com/in/andrealevyfinance. References: Article - Going Concern: Proactive Practices for Nonprofit Leaders and Requirements at Audit if Doubt is Raised, Jan McDaid March 3, 2026 HYPERLINK “https://hangroupllc.com/pov/going-concernproactive-practices-for-nonprofit-leaders-and-requirements-ataudit-if-doubt-is-raised/”Going Concern: Proactive Practices for Nonprofit Leaders and Requirements at Audit if Doubt is Raised • Han Group Book - Good boss: bad boss Robert I Sutton Book - Big feelings; How to be okay when things are not okay Liz Fosslien and Mollie West Duffy Discussions with Sara Boehm, CPA, Manager Accounting Services, Han Group
SUMMARY TABLE Priority
What to Do
Why It Matters
Understand the going concern disclosure
Confirm the conditions causing substantial doubt.
Ensures alignment between management, the board and external auditors
Liquidity evaluation
Create a weekly “days in cash” report
Helps prioritize employee obligations and avoid last-minute cash decisions.
Create a 13-week cash projection Create a 12-month forecast
Gives leadership a current view of liquidity and decision timing. Builds a realistic monthly forecast.
Expense reduction evaluation
Review fixed and variable expenses, renegotiate vendors, pause nonessential spending and evaluate hiring needs.
Preserves cash while minimizing disruption to mission-critical work.
Evaluate workforce options
Consider furloughs, salary reductions, reduced hours or hiring freezes before terminations.
Balances financial survival with continuity and operational capacity.
Consistent communication
Provide a true picture of actual results. Keep points succinct and concise.
Provides transparency of actual results
SEPTEMBER 2026 AZ CPA
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Thank You to Our PAC Contributors The ASCPA PAC is a well-respected voice at the Arizona Capitol, renowned for providing guidance and expertise in accounting, finance, business and tax matters.
The political action committee (PAC) is a fundraising entity that pools contributions from individuals and donates those funds to campaigns for or against candidates, ballot initiatives or other PACs. The ASCPA’s PAC exists to ensure CPAs and the CPA profession have a seat at the policymaking table. It ensures CPAs can focus on accounting, while we monitor changes in policy and oversight for you. Without active participants in the political process, we risk CPAs and the CPA profession being overlooked or otherwise adversely affected by legislation. Thank you to our top donors in the 2025-26 fiscal year who have donated $100 or more to the ASCPA PAC.
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AZ CPA SEPTEMBER 2026
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It’s All About Trust By Ryan DeMenna, Partner at DeMenna Public Affairs
The 2026 legislative session was laden with debates on conformity and budget. It was also a session of victories including pathways and a new Arizona State Board of Accountancy appointee. All of it was wrapped up in one thing: trust.
Continued on next page...
SEPTEMBER 2026 AZ CPA
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Trust has been a major theme for the Arizona Society of Certified Public Accountants (ASCPA) in 2026. Consider the importance of trust in the legislative process. Despite the preferred self-image of some policymakers, they simply cannot be all-knowing when it comes to policymaking. The law touches every aspect of our lives, making it impossible to have a deep understanding of the intricacies of everything from water law to economic development or from healthcare to tax policy. That’s why it’s critical for policymakers and their staff to cultivate a rolodex of trusted experts in their respective subject areas. And when it comes to tax policy, you would be hard-pressed to find a group for lawmakers to trust more than the ASCPA. Every session, the ASCPA advises elected officials on hundreds of bills, income tax conformity, the state budget and more.
Trust Worth $1.5 Billion The 2026 legislative session kicked off in January, but the ASCPA had already been busy advising elected officials on the potential impact of H.R. 1 in Arizona. The Joint Legislative Budget Committee (JLBC), the group charged with providing fiscal policy analysis for the legislature, estimated the cost of “full conformity” to be nearly $1.5 billion through fiscal year 2029. And the Big Beautiful Bill’s assortment of tax policy changes coupled with a $1.5 billion price tag had everyone asking the ASCPA and its members for guidance. Think about that for a moment. Lawmakers turned to the ASCPA and its members for their thoughts on legislation that would potentially have an impact of $1.5 billion in Arizona. That’s real trust. Months before session started, Governor Katie Hobbs introduced her Middle-Class Tax Cuts package, which matched most of the federal provisions included in H.R. 1.
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AZ CPA SEPTEMBER 2026
But in the first week of session, Republican state legislators sent Governor Hobbs a bill that included provisions beyond her Middle-Class Tax Cuts package. Governor Hobbs vetoed the bill, and Republicans were quick to point out that she had directed the Arizona Department of Revenue (ADOR) to issue forms for taxpayers that mirrored full conformity. Weeks later, Republican legislators sent Governor Hobbs another bill that sought to codify the tax guidance included on the state forms, but the governor vetoed that bill too. After the second conformity bill was vetoed, Republican leaders made it clear that they wouldn’t agree to anything other than a conformity bill that matched the guidance issued by ADOR. Their goal, they added, was to minimize taxpayer confusion and the need for amended returns by codifying the forms that were already being used by taxpayers. Legislative Republicans ultimately got what they wanted, and this year’s conformity legislation was included in the negotiated state budget proposal for fiscal year 2027 signed by Governor Hobbs in mid-June. Despite the fact that conformity was addressed well after Tax Day, the ASCPA was involved at every step in the process as a trusted advisor.
Entrusted With the Future The ASCPA is also trusted to serve as the voice of the profession in Arizona and this session, the ASCPA was the flag bearer for the largest legislative overhaul of the profession’s governing statutes in decades. For years, the CPA profession has been experiencing workforce shortages. In response, the American Institute of CPAs developed additional pathways into the profession to broaden the CPA candidate pipeline and meet growing demand. The importance of this legislation cannot be overstated as it also aligns with a nationwide effort that will preserve reciprocity privileges and enhance CPA mobility. Arizona’s version of the CPA Pathways legislation, dubbed the “Certified Public Accounting Act of 2026”, contained nearly 30 pages of substantial changes to the laws governing CPAs in Arizona. But with the ASCPA driving the effort, lawmakers across the board and across the aisle didn’t hesitate to support the bill. When the pathways legislation landed on Governor Hobbs’ desk, she signed the bill in less than 24 hours. Bipartisan legislative support and swift executive action are clear signals that the ASCPA is one of the most trusted professional
associations in Arizona. Having the CPA pathways legislation in place will support workforce growth in the profession, strengthen Arizona’s business community and ensure that Arizona CPAs remain competitive in a national market.
Recommended With Trust Perhaps one of the lesser-known priorities of the ASCPA, but one that is critical for the profession, is the ongoing effort to identify CPAs willing to serve on the Arizona State Board of Accountancy (Board). Arizona’s various boards and commissions continually struggle with vacancies. In some cases, boards and commissions are unable to meet because they don’t even have a quorum. Recognizing its importance to the profession, the ASCPA works closely with its members to identify CPAs willing to serve on the Board. The ASCPA is also careful to ensure continuity on the Board by identifying potential appointees with similar experience to those whose terms are expiring. This year, Governor Hobbs appointed Peggy Ullmann, founder of Ullmann & Company, to fill the vacancy that occurred on July 1. Ullmann was appointed in March 2026, several months before the actual vacancy would occur, which speaks to the level of trust the governor and her team have in the ASCPA and its members.
A Legacy of Trust
Dedication
Trust is also the cornerstone of a successful team dynamic. Something the ASCPA and DeMenna Public Affairs have in spades. DeMenna Public Affairs has represented the ASCPA since 1997. But this year was especially unique when you consider the collective legislative successes and the fact that Kevin DeMenna, my father, was the recipient of this year’s ASCPA Honorary Member award. During his remarks at the annual luncheon, Dad focused on a very specific reason for the nearly threedecade-long successful working relationship: trust. He explained that in the world of lobbying, other than a printed bill, all you have is an idea or a proposal. There is nothing to weigh, ship or photograph. Our work is built around trust. Elected officials trust the team at DeMenna Public Affairs to be knowledgeable and conversant in the topic of the day. They’re looking for facts and recommendations, and they trust us to put the correct material and the best experts in front of them. With that in mind, I want to reiterate his closing remarks: Thank you for trusting us. And for being the ideal client.
The ASCPA’s unwavering advocacy efforts have positioned the ASCPA and its members as trusted experts and advisors to legislators and their staff on both sides of the aisle. But this is only made possible by the dedicated members willing to volunteer their time and expertise to serve the profession in Arizona. Members who serve on the ASCPA’s Tax Legislation Review Committee (TLRC) scrub every tax-related bill to ensure the mechanics are in order, helping to avoid unintended consequences if it becomes operational as law. This year alone, the TLRC tracked and scrubbed nearly 160 bills. Not to mention the ongoing guidance and insight provided for this year’s tax conformity effort. Leading these efforts is the ASCPA’s President and CEO, Oliver Yandle, along with the Director of Government Relations, Emily Webb. Oliver, Emily and the entire ASCPA and DeMenna Public Affairs team work tirelessly to ensure that the ASCPA voice is heard in the legislative process, and that its members remain a trusted resource to the elected officials whose decisions have a direct impact on our everyday lives. l Ryan DeMenna is a partner at DeMenna Public Affairs which has been supporting the ASCPA’s advocacy efforts for more than 20 years. To learn more about how you can support our advocacy efforts, visit www.ascpa.com/advocacy.
SEPTEMBER 2026 AZ CPA
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2026 Legislative Wins By Emily Webb The ASCPA had a successful legislative session on behalf of Arizona CPAs. No matter the year or the issue, the ASCPA has your back at the Legislature.
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Fifth Annual Tax Conformity Debrief
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CPA Day at the Capitol
In December, legislators heard from Arizona CPAs about changes made to the Internal Revenue Code as part of H.R. 1 or the One Big Beautiful Bill Act (OBBBA) passed in July 2025. This event reiterated the importance of income tax conformity and encouraged lawmakers to get the ball rolling early. While income tax conformity was ultimately passed as part of the state budget in June, the ASCPA maintained its position that the earlier conformity is passed, the better it is for Arizona taxpayers.
The fifth annual CPA Day at the Capitol was held in January. In addition to building a stronger connection between state policymakers and the ASCPA, attendees advocated for creating additional pathways to licensure, early income tax conformity, maintaining the gold standard of licensure mobility and reciprocity, and a willingness to engage as nonpartisan resources for legislators. Interested in attending the next CPA Day at the Capitol? Contact Emily Webb at ewebb@ascpa.com
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Additional Pathways
04
Engaging Stakeholders
This year, the ASCPA advocacy team worked with the State Board of Accountancy to draft language to create additional pathways to licensure. This measure keeps Arizona CPAs competitive and aligned with the 44 other jurisdictions that have already made changes to state statute related to licensure (as of July 29, 2026). The bill was introduced as SB 1181 (certified public accountants; certification; alternative) by Senator JD Mesnard and received near unanimous support across the House and the Senate, and between both parties. SB 1181 was signed on April 7 and will go into effect on January 1, 2027.
The ASCPA Tax Legislation Review Committee (TLRC) worked with various stakeholders this session to provide insight on bill language. Tax conformity was a large issue this session, and several iterations of tax conformity legislation were sent to the ASCPA advocacy team for review and input from the TLRC. The ASCPA continues to work with the Arizona Department of Revenue (ADOR) to address issues brought forth by members. This is yet another example of how the ASCPA has enhanced the organization’s standing with its advocacy program and volunteers and with state policymakers. Legislators on both sides of the aisle seek feedback and review from the ASCPA and our expert members on tax legislation. Thank you to the volunteers of the ASCPA’s Tax Legislation Review Committee, who serve Arizona and the profession by providing nonpartisan technical expertise on all tax legislation: James Busby, Gary Williams, David Walser, Ed Zollars, Michael Lemme, Jack Gallagher and Caron Mitchell. Emily Webb is the director of government relations at the Arizona Society of CPAs. You can contact her at ewebb@ascpa.com.
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AZ CPA SEPTEMBER 2026
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Where Does AI Belong in Your SOC 2 Internal Controls Framework? By Michael S. Nyman, CPA, CISA, CISSP, CITP, CRISC
Should the AICPA add a sixth Trust Services Criteria (TSC) category specifically for Artificial Intelligence (AI) governance and risk management? This question is increasingly important as organizations grapple with AI-specific risks that don’t neatly fit into the existing System and Organization Controls 2 (SOC 2) framework. Basis for Question The AICPA has acknowledged the growing role of AI, especially generative AI, and has begun issuing nonauthoritative guidance on AI use in various service areas. Still, AI-specific governance instruments have not been formally incorporated into the SOC 2 framework. These include ISO/IEC 42001 which is the international standard for AI management systems, jointly published in 2023 by the International Organization for Standardization (ISO) and the International Electrotechnical Commission (IEC). Then there is the NIST AI Risk Management Framework (AI RMF 1.0, released by the U.S. National Institute of Standards and
Technology in January 2023), and the EU AI Act (the European Union’s Artificial Intelligence Act, Regulation (EU) 2024/1689, in force since August 2024). SOC 2’s TSC still consists of five categories: security, availability, processing integrity, confidentiality and privacy. However, the AICPA recently revised its guidance on the criteria used by management to prepare SOC 2 reports, and by management and service auditors to evaluate the design and operating effectiveness of controls. These updates reflect growing recognition that the traditional framework has limitations when applied to AI workloads, but they represent incremental improvements rather than structural expansion.
Real Audit Gaps Practitioners Are Finding The case for a sixth category becomes clearer when examining what auditors are actually discovering. A practitioner research report has documented 32 specific gaps across all five SOC 2 TSC and proposes 47 new AI-specific control objectives across nine domains. These gaps reveal that AI risks fall into blind spots: • Accountability and Autonomy: Auditors will often treat “no human request” as a major accountability gap, because SOC 2 expects privileged actions to be attributable to an accountable individual, not to an autonomous agent or generic Continued on next page...
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system. Agentic AI systems that execute transactions without direct human oversight create control challenges that the five categories don’t explicitly address. • Runtime Enforcement vs. Policy Documentation: SOC 2 auditors are no longer satisfied with policy documents and governance committee meeting minutes. As AI workloads move into production, the TSC now requires evidence that governance is enforced at runtime, not merely documented in a binder. • Model Drift and Behavioral Monitoring: Without behavioral monitoring, signals of model degradation are invisible until a customer-facing incident forces detection. Auditors flag the absence of behavioral monitoring as a control gap. • Shadow AI Governance: Shadow AI occurs when people within an organization adopt AI-powered tools, including large language models like ChatGPT or Claude, code completion tools, AI writing assistants, and AI-enhanced browser extensions without the knowledge, vetting, or approval from IT or other compliance functions. This creates audit findings that don’t fit neatly into the five existing categories.
• Third-party AI services and vendor management: Risks from using external Large Language Models (LLM), Application Programming Interfaces (API) and AI platforms • Autonomous action accountability: Attribution and audit trails for AI-initiated state mutations • Responsible AI use and guardrails: Safeguards against misuse, prompt injection and unintended model behavior
Why the AICPA Hasn’t Formalized This (Yet) The AICPA appears to be taking a deliberate wait-and-see approach for several reasons: • Standards Proliferation Risk: Adding AI as a sixth TSC category might duplicate ISO 42001, NIST AI RMF, and emerging regulatory frameworks (EU AI Act). The AICPA may believe these specialized
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What Organizations Are Actually Doing Instead Rather than waiting for an official sixth category, organizations are adopting hybrid approaches with mixed results:
Results
Mapping AI risks to existing TSC
Most AI controls map to Security or Common Criteria (CC) — CC6, CC7, CC8, and Process Integrity1 with new supplementary controls. However, this approach requires custom scope amendments and relies heavily on auditor interpretation, creating inconsistency across audit engagements.
Layering ISO 42001 onto SOC 2
Organizations looking to cover AI-specific risks not included in their current SOC 2 TSC could add testing of Annex A of ISO 42001 (38 controls total) to Section 4 of their SOC 2 reports to demonstrate the AI controls they have in place. ISO 42001 has emerged as the flagship AI standard given its specificity to the technology and focus on all its nuances.
Combined SOC 2 and ISO 42001 (with caution)
Dual SOC 2 and ISO 42001 compliance fails in 60% of enterprise implementations because organizations run parallel programs, creating duplicate evidence collection and control gaps that surface during audits. Success requires integrated control mappings and unified evidence pipelines.
• Bias, fairness and explainability: Detection and mitigation of algorithmic bias with documented rationale for decisions
• Model performance monitoring: Drift detection, behavioral anomalies and continuous validation
• Industry Maturity: AI governance practices are still evolving rapidly. Formalizing a TSC category requires confidence in durable control frameworks. The AICPA may be waiting for industry consensus to emerge around ISO 42001 and NIST guidance.
Approach
A dedicated AI Governance Trust Service Criteria could explicitly address:
• Data provenance and training data governance: Quality, sourcing and ongoing assessment of training data
• Flexibility Over Rigidity: SOC 2, governed by the AICPA’s TSC, doesn’t currently describe how to implement controls. It focuses on what outcomes must be achieved. A sixth category might lock organizations into specific AI governance approaches before the field stabilizes.
HYBRID APPROACH
Arguments for a Sixth Category
• Model governance and lifecycle management: Development, validation, deployment and retirement of AI models
standards are better suited to AI governance than expanding SOC 2.
Critical Implementation Gaps Organizations Face Today
Practical Guidance for Organizations Now
Beyond the conceptual debate, practitioners are encountering concrete problems:
If you cannot wait for a formal sixth category, consider this phased approach:
• Auditor Discretion: Auditors have significant discretion in interpreting the TSC for AI. Because of this, the audited organization should hold a planning conversation with its auditor before the attestation period begins, to agree on which AI systems fall within SOC scope and how the TSC will be interpreted for those systems’ controls. Without this upfront alignment, identical AI control implementations may pass one audit and fail another.
1. Establish AI system inventory and scope: Identify all AI systems in production, including shadow AI tools and third-party services.
• Treating AI as Regular Software: Standard SOC 2 controls are a starting point, but do not address drift, bias, non-determinism and training data governance. You need AI-specific controls layered on top. • Timing Risk: SOC 2 Type II examines a 6-12 month window. If you implement controls two months before the audit, you will not have enough evidence. Start at least six months early.
Regulatory Pressure and Timeline Implications The pressure to formalize AI governance is mounting. The latest AICPA-CPA Canada publication advances the discussion by turning to assurance, highlighting the increasing expectation for independent evaluation of systems that influence business outcomes. This suggests that the AICPA recognizes AI assurance as a core professional responsibility, even if formal TSC expansion hasn’t happened yet. EU AI Act compliance, state-level AI regulations, and SEC guidance on AI disclosure are accelerating the timeline. The AICPA may face pressure to act within 12-24 months if auditors continue to encounter significant governance gaps.
2. Map to existing TSC with documented scope amendments: Explicitly name AI systems in your SOC 2 audit scope and agree on control mappings with your auditor upfront. 3. Implement ISO 42001-aligned controls: Implement controls addressing highest-risk gaps from Phase 1, then advanced controls and continuous compliance capabilities. 4. Enforce runtime governance evidence: Move beyond policies to automated enforcement records, audit trails and behavioral monitoring. 5. Address shadow AI as governance: Approve a curated set of AI tools, evaluate them through your existing vendor management process and deploy them with corporate Single Sign-On integration.
The Counterargument: Why a Sixth Category May Not be Necessary Some argue that formalizing a sixth TSC category would be counterproductive: • ISO 42001 fills the gap more comprehensively than any SOC 2 add-on could. • Scope creep: SOC 2 is already complex; a sixth category could make scoping audits unmanageable. • Future-proofing: Keeping AI governance outside the formal TSC allows flexibility as regulations evolve. • Specialization principle: AI assurance may be better served as a distinct certification rather than a SOC 2 sub-domain.
Bottom Line Should the AICPA add a sixth category? The most likely outcome is continued incremental guidance updates rather than formal TSC expansion in the near term. However, organizations that have passed SOC 2 Type II audits while operating production LLMs, RetrievalAugmented Generation pipelines, and AI agents have passed those audits with significant unexamined risk. The prudent approach today is treating AI governance as a distinct discipline requiring ISO 42001 alignment, custom SOC 2 scope amendments, and runtime enforcement evidence — not relying on the five existing categories alone. Organizations that proactively layer AI-specific controls onto their SOC 2 programs will be better positioned if the AICPA eventually formalizes a sixth category, and they’ll provide more meaningful assurance to stakeholders regardless. l Mike Nyman is an IT Compliance, SOC, and GRC leader with experience directing IT audit and risk programs at complex, regulated enterprises. He holds CPA, CISSP, CISA, CITP, and CRISC certifications. Connect with him on LinkedIn: linkedin.com/in/michaelnyman. References 1. Baker Tilly. “Evolving SOC 2 reports for AI controls.” February 13, 2026. https://www.bakertilly.com/insights/ai-controls-for-soc2-reports 2. EY. “To the Point – AICPA revises guidance on applying its Trust Services Criteria and SOC 2 Description Criteria.” January 20, 2026. https://www.ey.com/en_us/technical/accountinglink/ to-the-point-aicpa-revises-guidance-on-applying-its-trust-servicescriteria-and-soc-2-description-criteria 3. KNAVCPA. “AI Assurance in Practice: Preparing Professional Accountants for the Next Stage of Trust.” Based on AICPA-CPA Canada 2025 publication. January 20, 2026. https://us.knavcpa. com/insights/ai-assurance-in-practice-preparing-professionalaccountants-for-the-next-stage-of-trust/ 4. Schellman. “How to Incorporate AI Controls into Your SOC 2 Examination.” November 4, 2024. https://www.schellman.com/ blog/soc-examinations/how-to-incorporate-ai-into-your-soc-2examination 5. Michel Hjazeen. “SOC 2 for AI Systems: The Missing Controls Framework.” February 17, 2026. https://www.michelhjazeen.com/ articles/soc2-ai-systems-missing-controls-framework 6. Goteleport. “How AI Agents Impact SOC 2 Trust Services Criteria.” February 25, 2026. https://goteleport.com/blog/aiagents-soc-2/ 7. Linford & Company. “Shadow AI and SOC 2: How It Creates Audit Gaps.” February 2026. https://linfordco.com/blog/shadowai-soc-2/ 8. Augment Code. “AI Governance Framework for SOC 2 & ISO 42001 Compliance.” November 7, 2025. https://www. augmentcode.com/guides/ai-governance-framework-for-soc-2-andiso-42001-compliance 9. BeyondScale. “SOC 2 for AI Systems: What Your Auditor Will Actually Ask.” February 15, 2026. https://beyondscale.tech/blog/ soc2-compliance-ai-systems 10. Orion Intelligence Agency. “SOC 2 AI Controls – What Auditors Actually Require.” February 21, 2026. https://www. orionintelligenceagency.com/insights/soc-2-ai-controls
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Private Equity: A CFO’s Perspective By Ted Bartlett
Private Equity (PE) has become a major form of business ownership, and it’s expected to continue to grow. As retiring owners of traditional private companies look for buyers, PE sponsors are often their best option. They have ready access to capital and strong existing lender relationships, which makes them a lot more likely to successfully close on a transaction than somebody trying an entrepreneurship-throughacquisition route. Continued on next page...
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For CPAs, assuming a financial leadership role in a private equity portfolio company can be a very rewarding career move. With more companies taking on private equity sponsorship and longer hold periods of existing portfolio companies, the demand for PE-ready financial leaders is higher than ever. The supply of those leaders though, is constrained by retirements of the most accomplished and proven performers. The other reality is that a CFO in a successful PE exit can make enough money to allow for early retirement on their first completed cycle. These two factors are leading PE sponsors to turn to first-time PE CFOs more than they would like.
How Does Private Equity Work? The most common method of PE entry is the leveraged buyout. The PE fund deal team will identify and execute an acquisition — generally using significant debt that is held at the portfolio company level. They will have underwritten the deal based on a specific and detailed investment thesis that will spell out the value creation plan for a time-bound holding period — usually between three and seven years. Early on, that deal team will assess the existing business and will often look to improve human capital
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quality, particularly in the CEO and CFO roles. The CFO is often arguably the most important person in the business because they’re the closest to the investment thesis and they act as the internal North Star for the value creation plan. There will sometimes be a CFO operating partner who tends to be an employee of the fund and has usually been a successful PE CFO. The CFO operating partner will work with the CFOs of several investments at the same time. The board of directors will generally be dominated by the PE fund and the level of scrutiny will be higher than in other ownership structures. During the era of Zero Interest Rate Policy, there was a financial engineering play that was principally responsible for many successful PE exits. Essentially, the fund’s ability to borrow easily at low cost allowed for the rapid acquisition of similar companies in fragmented industries. That consolidation tends to raise the earnings they could get upon exit. Even without significantly improving profitability or integrating the different legacy businesses very well, the portfolio company could achieve sufficient value growth based on the increased multiple to achieve a successful exit.
In the current interest rate environment, it’s much harder to do that. Most investments in theses are now built upon with an assumption of high execution and integration quality (sometimes referred to as Alpha). To achieve that outcome, the CFO needs to be clear about what is most important, and that clarity comes from constant vigilance toward alignment with the investment thesis.
The Private Equity Experience Upon entering a PE-sponsored business, the CFO will be expected to make a quick and early impact, and set a course for continuous improvement. Often, the accounting quality of the legacy business is subpar by PE standards, and the reporting cadence and quality almost always needs to be enhanced. The acquired company will often be what PE calls a “lifestyle company,” which means that it essentially existed to provide a certain level of income to a private owner or group of owners. As long as the business hit that mark, everything else was fine, and this assumption tends to be internalized through experience by the legacy employee base. A major mindset difference between PE and other forms of ownership is that the CFO must think of the enterprise as
an investment rather than as a standard company. To realize the value of the investment takes steady improvement across the entire enterprise — encompassing margin generation, operational efficiency, system and process improvements, all while usually integrating multiple acquisitions. Amid all of that, the board will monitor value creation on a constant basis and compare it to the value creation plan and investment thesis. Often, the inherited team doesn’t want to embrace the necessary change and slippage from the plan tends to be problematic for the careers of the top leaders. In other words, PE finance leadership isn’t for the faint of heart. Additionally, a lot of the qualities that make a good CPA are less valued in the CFO seat of a PE investment than they would be in other forms of business. Precision is de-emphasized to some extent, and speed to make decisions, often in the face of risk and uncertainty, is prized. Accounting work, in general, is de-emphasized in private equity, and there’s a strong desire to automate as much of it as possible. At the same time, PE will spend more resources on strong Financial Planning and Analysis (FP&A) capabilities than other types of businesses. When the ultimate exit plan is an initial public offering, more rigor will need to be applied to accounting and controls, with preemptive thinking about Sarbanes-Oxley compliance before it’s needed by the company. An ideal finance leadership structure in PE is an FP&A-oriented CFO who can operate quickly and lead amid ambiguity, and a detailoriented controller, who can maintain strong accounting integrity for the business. Both can, and often do, come from CPA backgrounds, but it’s crucial that role clarity exists among all participants. The CPA who would rather report the news than make the news probably isn’t ideal for the CFO seat in a PE investment. The CFO is treated as responsible for everything
that happens and to succeed, they must be comfortable with being held accountable for outcomes that they don’t always directly control. As private equity continues to emerge in Arizona, mainly at the portfolio company level, but also secondarily at the fund level, it’s important for CPAs to understand what they’ll be getting into as they’re recruited to join.
The Company as a Product Because we are thinking of the company as an investment, and investments are eventually sold, the next mental step is to think of the company as a product in itself. The best mindset to have is that improvement is needed to make it maximally attractive to the universe of potential buyers. This is a completely different mindset than one that would be optimal for a family-owned company, where the main priority is often multi-generational stability and transferability. It’s also different than a public company, where a lot of focus goes to meeting market expectations on a quarterly basis. In PE, we’re going from a starting point toward an ending point, and we need to be ready to shine brightest at the end, when it’s time to be attractive to buyers.
Why Would I Join a PE Investment? For a CPA who is well-equipped to succeed in PE, the personal financial upside is often quite high. The fund will generally issue Restricted Stock Units (RSUs) to the key executives in the investment to align incentives in service of improving the business and moving toward the eventual sale of it. Due to the equity participation, the CFO in the investment has a true stake in the performance of the company. In most jobs, as a leader, the expectation is that you will feel ownership for the activities and outcomes of the company. In a PE investment, the key leaders actually do have ownership.
So How Do I Get In? The best way to get hired in a PE investment is to have previously succeeded in one. The operating environment is different from other forms of business and nothing gives a deal team assurance of success like a person who has a track record in a similar context. At the CFO level, it’s hard to break into your first role coming from a family business. Sometimes, PE deal teams will hire a former public company CFO into a PE role and that tends to be a struggle in practice. The best way in is probably to get into a mid-level FP&A or controllership role in a PE investment and grow into PE CFO readiness through that experience. Sometimes, entering directly from public accounting is possible, too, but there’s a big learning curve. The job is completely different from being an audit partner.
In the End The PE CFO will be required to create a lot of value as a leader and it fundamentally tends to be a builder’s job. The controls, processes, and systems that are inherited are usually subpar and need to be improved quickly, amid a lot of resistance. Finance leadership in PE offers high rewards, but it comes with high career risk, high stress and high expectations. It’s a great career move for people who are geared to succeed under those conditions. l Edward Lowell Bartlett III, CPA, also known as Ted Bartlett, is Chief Financial Officer at Ascent Lifting in Phoenix (www.ascentlifting.com). Ascent is a value-added distributor of rigging products operating 42 locations in 16 states. Ted can be found on LinkedIn and contacted at ted.bartlett@ gmail.com
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Future CPAs: Scholarship Winners
The Arizona CPA Foundation for Education & Innovation supports the efforts of the Arizona Society of CPAs to strengthen the pipleine through initiatives in education such as awarding scholarships. Scholarships are not only practical for accounting students to cover tuition and books, but it’s an encouragement from the community to pursue an accounting career and the CPA licensure. Donate today and change tomorrow for future CPAs www.ascpa.com/foundation.
Congratulations to our 2026-27 scholarship recipients.
Lena Ference
Jackson Millsaps
Elizandra Burruel
Mikenna Sharp
Pinnacle High School (Arizona State University)
Desert Vista High School (Arizona State University)
Northern Arizona University
Northern Arizona University
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Bryce Andersen
Hunter Bickes
Victor Gomez
Angel Gonzalez
University of Arizona
University of Arizona
Grand Canyon University
Grand Canyon University
Not Pictured: Andrew Broughten Queen Creek High School (Arizona State University) Steven Faria Northern Arizona University Madison Mulkins University of Arizona Lucia Kim
Kham Sian Khual
Grand Canyon University
Glendale Community College
GET INVOLVED If you’re ready to engage with our student members, learn more about our outreach efforts, support initiaitves and share your experience as a CPA, contact us at student@ascpa.com. We’ll help you find a meaningful way to give back that positively impacts the future of accounting. SEPTEMBER 2026 AZ CPA
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Internship Turning Points By Rosa Hernandez
The pipeline is a constant point of discussion in the accounting industry. Here at the Arizona Society of Certified Public Accountants (ASCPA), we have over 500 student members. We regularly engage with high schools, colleges and universities, and we advocate for policies that create additional pathways into the profession. Another way we believe in strengthening the pipeline is through internships. Here are key insights from former interns, collected across seven different accounting firms — Aprio (formerly Price Kong), BeachFleischman, CLA (CliftonLarsonAllen), Eide Bailly, REDW, Walker & Armstrong and Wallace Plese + Dreher (WP + D). Continued on next page...
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Internships are an incredibly important part of the pipeline for the future of accounting. They provide students with the opportunity to explore different fields, workloads and work environments. Depending on their experience, internships can influence a student’s decision to pursue further education and certification.
How do students find internships? “All of my internships came from attending events like Meet the Firms and from connections I formed throughout college. I focused on having genuine conversations and building connections beyond the formal interview process.” — Cameryn Frogge, Assurance Associate, CLA Primarily, students find internships through connections made at networking events, such as their college’s Meet the Firms event. They also find internships through independent searches, peer recommendations and various other sources. “Reading about previous interns’ experiences on the firm’s website also stood out. It consistently described a strong learning environment with supportive mentors.” — Brandon Galvez-Garcia, Audit Associate, Aprio (formerly Price Kong)
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What do students look for in an internship? When you hire an intern, you’re not just filling a temporary role, you’re investing in the future of accounting. Whether they are your future hires or another’s, they are looking at your culture and leadership as guiding posts of what it means to work in accounting. Every interaction shapes their perception of not only your company, but the profession overall. “I chose REDW because it stood out as a firm that offered both strong professional development and a supportive culture. I was drawn to the opportunity to learn from experienced professionals, contribute to real client work and gain exposure to a variety of experiences that would help me grow early in my career.” — Nolan Hokanson, CPA, MSA, Senior Audit Associate I, REDW Three common themes came from the feedback we received from the former interns. They looked for an internship with: • Opportunities for meaningful learning • Inclusiveness — being treated like an associate • Supportive leadership and teams
Students want a variety of experiences during their internships. They value opportunities to explore both audit and tax, assist on a range of tasks, and maximize their exposure to the profession. Students also want to be treated as valued associates — that what they say matters, and they can be trusted to take ownership of tasks. Last, they want support — who doesn’t? Interns are looking to you and your team to train them well, be available for questions, guidance and even mentorship.
Why do students accept FTE with the place they interned? Not surprisingly, interns typically accept full-time employment (FTE) with a company that: • Is supportive • Has a balance between professionalism and personalism • Invests in employee development Interns stay with companies that offer a friendly, encouraging and supportive environment. “We all look out for each other and will gladly pause what we are working on to help someone else answer a question or talk through an issue. Busy Season is hard and hours are long, but it is so much more enjoyable to experience when you genuinely like the people you work with.” — Emily L. Mead, CPA, Tax Supervisor at WP+D
Another thing interns notice that helps tip the scales towards saying ‘yes’ to the offer of employment, is a balance of professionalism and personalism. They don’t want to be just another body to do the work, they want to be valued for who they are and what they can do. Finally, no shocking gasp from us, interns say ‘yes’ and stay at a company that invests in their growth. This can come from creating opportunities to assist with special projects, paying for classes and membership to learning platforms and associations, and once again — mentorship.
Advice to Make the Most of an Internship We asked our former interns for advice on what they believed helped them stand out. Three pieces of advice were repeated throughout all the responses. The first was to ask questions. Former interns emphasized the importance of asking questions. “My advice to current accounting students would be to sample a variety of firms via internship and externship opportunities and ask as many questions as possible during the experience. As someone who regularly interviews candidates for the firm and works with interns during their first week of training, I’m always impressed by the students who ask the unexpected questions. An internship is your opportunity to find out what a career at a specific firm, or within a specific industry, is really like – so take advantage!” — Gina Khawam, CPA, MAcc, Manager of Internal Tax Operations, BeachFleischman Second, was to build genuine connections. From networking to workplace collaboration, connecting with colleagues is incredibly important to success and longevity in a company. But how does one build those relationships? One former intern stressed that part of being genuine is to start with being yourself.
“Be yourself. While professionalism is important, being personable and maintaining a positive attitude can go a long way in building strong relationships and making a lasting impression.” — Ryan McCargar, Assurance Associate, Eide Bailly Third, be open-minded. Many of the former interns talked about being open-minded when it came to learning, receiving feedback and opportunities. It’s the readiness to embrace all you don’t know just yet and staying curious that truly sets you apart. “I would also encourage future interns to give each type of work more than one chance. A single experience may not provide a complete picture, and your perspective can change as you gain more knowledge and confidence. By approaching each opportunity with an open mind and trying different types of audits multiple times, you’ll be better equipped to identify the areas of accounting that you find the most rewarding.” — Olivia Martin, Audit Associate, Walker & Armstrong
Investing in an internship program is a pivotal way to support the accounting pipeline and if you’re wondering how you can get in front of students or you need support with workplace culture, the ASCPA is here to help. We have robust student sponsorship programs, the ability to communicate with over 500 student members and diverse educational offerings to ensure your company stands out. To get started, contact us today at students@ascpa.com. A special thank you to the firms and their staff for participating in this article. Your advice will help the next generation of interns. l Rosa Hernandez is the communications manager at the ASCPA. She has over a decade of experience in nonprofits, communications and management. To connect with her, visit her LinkedIn profile at https://www.linkedin.com/in/rosa-isabelhernandez/
Bottom Line Students take internships seriously. They are strategic in what they search for in an internship, where they apply and ultimately, where they end up after graduation.
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Selling Your Practice?
Call Today Sell By Year End!
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Delivering Results - One Practice At a time Sherif Boctor, CA CPA 888-783-7822 Hannah Boctor Ateam@APS.net
The Cost of Hiring Too Fast By Keri Ohlrich, PhD
When you’re under pressure to fill a spot on your team, it can seem unreasonable to not take the first “okay” hire off the street. You and your team need help, but relief is often just that: fast and temporary. Learning to slow down, ask the right questions, and trust your instincts can save you more than money. It can save you from doing all this over again in six months.
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I remember working as the HR Business Partner for a group led by an incredibly talented and incredibly fast-moving leader. They expected a lot from themselves and from their team. They believed in moving quickly, making decisions and keeping momentum. When an employee left, they immediately felt the pressure of having an open position. The work didn’t slow down just because someone resigned. Deadlines still had to be met. Clients still needed support. The rest of the team was stretched thin. After several interviews, the manager found a candidate who seemed “good enough.” Even as we discussed the candidate, the manager admitted they had reservations. They weren’t completely convinced this person could perform at the level the rest of the team expected. But the desire to have a full team was simply too strong. They made the hire anyway. Unfortunately, those concerns proved to be accurate. The new employee struggled to keep pace with the rest of the team, and over time, performance issues created additional work for the manager and frustration among team members. High performers began compensating for missed deadlines and inconsistent work, which created tension and resentment. Eventually, the employee resigned, and the manager found themselves back where they had started, except this time they had spent months onboarding, coaching and managing poor performance before reopening the search. That experience has stayed with me throughout my career because I’ve seen versions of it play out time and time again. Hiring managers rarely make these decisions because they don’t care about quality. They make them because they’re under pressure. They need help. They need relief. They need someone in the seat. And that’s what makes recruiting so difficult.
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The Pressure Is Real The tension between hiring quickly and hiring well is one of the hardest balancing acts leaders face. Every day a position remains vacant, it places additional strain on the manager, the team and often the organization’s clients. It is completely understandable why managers want to make decisions as soon as possible. After more than twenty years in HR, I’ve learned that the pain of an open position is usually temporary. The pain of the wrong hire can last much longer. When organizations are under pressure, it’s easy to focus almost exclusively on technical qualifications: • Does this person have the right accounting experience? • Have they worked with similar clients? • Can they step into the role quickly? Those questions absolutely matter, but they aren’t the only questions that matter.
Look Beyond the Resume The questions that often predict long-term success are different, because they go beyond those technical qualifications: • How does this person respond to feedback? • How do they handle competing priorities? • What motivates them? • How do they approach accountability? • Will they contribute positively to the team during stressful periods? • Are they someone others will trust and enjoy working alongside? These conversations begin to uncover whether someone will thrive within your organization’s environment rather than if they can simply perform the technical aspects of the position.
The term “culture fit” has become more nuanced over the past several years, and for good reason. Organizations should never hire people simply because they are similar to everyone already on the team. Strong organizations benefit from different perspectives, diverse experiences and healthy debate. Instead of looking for people who “fit in,” I encourage leaders to think about whether a candidate will contribute to the culture they are intentionally trying to build. The best hires are people whose behaviors align with the organization’s values. They collaborate. They take ownership. They communicate openly. They support their teammates. They care about delivering exceptional service to clients. Those qualities strengthen a culture regardless of someone’s background or personality.
Don’t Ignore Your Gut Instinct One of the biggest mistakes organizations make is allowing urgency to override judgment. I’ve had hiring managers tell me, “I know they aren’t exactly what we’re looking for, but we need someone.” I understand that feeling. I really do. But hope is not a hiring strategy. If you already have significant concerns before extending an offer, those concerns rarely disappear after someone joins the organization. More often, they become amplified once the individual begins working under the daily demands of the role. That doesn’t mean organizations should search endlessly for a perfect candidate. Perfect candidates don’t exist. It does mean leaders should be intentional enough to distinguish between a candidate who may need development and a candidate whose work style, behaviors or capabilities raise genuine concerns. One question I often encourage hiring managers to ask themselves is surprisingly simple: “If this position weren’t currently vacant, would I still be excited to hire this person?” When the urgency of filling the role is removed, the answer often becomes much clearer.
Consider the Hidden Costs Most organizations know the cost of recruiting. They can calculate advertising expenses, recruiter fees, onboarding costs and salary. The harder costs to measure are often the ones that have the greatest impact: • Decreased team morale • Time spent coaching and managing performance • Lost productivity • Frustrated clients • Burnout among high performers • Hiring the same position twice While those costs are difficult to capture on a spreadsheet, they are very real. Taking additional time during the hiring process doesn’t necessarily mean adding multiple rounds of interviews or creating unnecessary delays. Sometimes it simply means slowing down long enough to ask better questions, involving the right interviewers, verifying concerns or deciding that waiting a few more weeks is a better investment than making the wrong decision today.
The Best Hiring Decisions Require Patience As HR professionals, we often remind leaders that recruiting isn’t just about filling positions. It’s about building teams that will succeed together over the long term. The manager I worked with years ago learned that lesson firsthand. They later told me that the temporary relief they felt after filling the position wasn’t worth the months of additional work that followed. From that point forward, they became much more disciplined during the hiring process. They still moved quickly, but they no longer ignored their instincts simply because the position was vacant. That lesson stayed with me as well. A position can survive being open a little longer. A high-performing team shouldn’t have to survive the wrong hire. l
Dr. Keri Ohlrich is CEO and Co-founder of Abbracci Group, where she provides fractional HR leadership and executive coaching to help organizations build stronger people strategy and sustainable culture change. With over two decades of HR leadership experience spanning startups to Fortune 500 companies, she is co-author of “The Way of the HR Warrior” and “Whatever the Hell You Want”. Keri holds a PhD in Human Development and Organizational Systems and is certified in Prosci® change management, Caliper, and Denison Cultural Assessment methodologies. Connect with her at hello@abbraccigroup.com or on LinkedIn at linkedin.com/in/keriohlrich.
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What Every CPA Should Know About America’s Audited Annual Report By Michael G. Doorley, CPA (NY)
Certified Public Accountants prepare, audit, analyze, and rely on audited financial statements throughout their careers. Yet one of our nation’s most important audited financial reports remains unfamiliar to many members of our own profession. The Financial Report of the United States Government is America’s audited annual report. Produced each year by the U.S. Department of the Treasury, in coordination with the Office of Management and Budget (OMB), the Financial Report presents the federal government’s audited financial statements, prepared using accrual accounting in accordance with federal accounting standards. Like the annual reports of public companies, and generally nonprofits and state and local governments, it includes management’s discussion and analysis, audited financial statements and notes to the financial statements, and the independent auditor’s report. Continued on next page...
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Despite its significance and online availability, the report receives relatively little media or public attention. Former Congressman Jim Cooper once described it as “one of the best-kept secrets in America.” More than fifteen years later, his observation remains remarkably accurate. For CPAs, that is reason enough to become familiar with it.
government. Although the legislation has not been enacted, the AICPA’s support reflects the profession’s longstanding commitment to transparency, accountability and improving public understanding of financial reporting. For CPAs, these affirmations underscore the significance of the report as an important public financial document.
An Important Public Financial Report
Understanding the Federal Government’s Financial Statements
Public discussion of federal finances most often focuses on economic growth, inflation, employment, interest rates, taxation, government spending, the annual federal budget deficit and national debt. Those issues are important and deserve thoughtful discussion. The Financial Report complements those discussions by providing audited, accrual-based financial information about the federal government’s financial position, operating results and long-term financial condition. Its importance is emphasized in the Executive Summary itself. The Secretary of the Treasury, the director of the OMB, and the comptroller general of the United States jointly emphasize that the information presented in the Financial Report is important to all Americans. Their message reflects a shared belief that informed discussion of the nation’s financial position should be supported by reliable financial information. The accounting profession has expressed a similar commitment to improving public understanding of the nation’s finances. The AICPA supported the bipartisan Fiscal State of the Nation Act. This legislation would require the congressional budget committees to conduct an annual joint hearing to receive a presentation from the comptroller general regarding (1) the Government Accountability Office’s audit of the financial statement of the executive branch, and (2) the financial position and condition of the federal
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The Financial Report is prepared using accrual accounting, the same accounting framework familiar to every CPA. Like other audited financial statements, it contains a balance sheet, statement of net cost (the federal government equivalent to an income statement), statement of operations and changes in net position, extensive notes to the financial statements and required supplementary information. Collectively, these statements provide readers with a broader understanding of the federal government’s finances and financial position than annual budget information alone. That distinction is particularly important. Most media attention focuses on the annual federal budget deficit because it measures approximately how much the federal
government needed to borrow during the fiscal year. The Financial Report also presents net operating cost, the federal government’s accrual-based measure of annual financial performance — described in the Financial Report as the “Bottom Line”. Every CPA understands why these two measures differ. Cashbased measures report financing requirements. Accrual-based measures recognize revenues and expenses in the periods in which they are earned or incurred. Both are important because they answer different financial questions. The difference between the two measures can be significant. For example, in fiscal year 2022 the federal budget deficit was approximately $1.4 trillion, while net operating cost was approximately $4.2 trillion. These figures are not contradictory. They simply measure different aspects of the federal government’s annual financial performance. Changes in actuarial assumptions, veterans’ benefits, federal employee pensions, environmental liabilities, insurance programs and other long-term obligations can significantly affect accrual-based operating results without immediately affecting annual cash flows.
For CPAs, understanding both perspectives is second nature. That same perspective is valuable when reviewing the federal government’s audited annual report. Like any audited annual report, its purpose is not to advocate but to present reliable financial information.
Looking Beyond Annual Operating Results CPAs also know that annual operating results tell only part of the financial story. Every comprehensive financial analysis eventually asks another question: What is the organization’s financial position? The Financial Report answers that question through the federal government’s balance sheet. For fiscal year 2025, the federal government reported approximately $6 trillion in assets, $48 trillion in liabilities and a negative net position of approximately $42 trillion (exclusive of Heritage and Stewardship assets). These amounts reflect obligations recognized under federal accounting standards and provide important information about the government’s long-term financial condition. As with any audited financial statements, the accompanying notes provide essential context for understanding the reported amounts and the assumptions underlying them.
Understanding these figures does not require agreement on fiscal policy. Reasonable people will continue to hold different views regarding taxation, government spending, entitlement programs, borrowing and debt management. The purpose of the Financial Report is not to resolve those policy debates. Its purpose is to provide reliable, independently audited financial information that contributes to a more complete understanding of the federal government’s finances. For CPAs, this approach is familiar. Throughout our careers we have relied upon audited financial statements to evaluate an organization’s financial position, operating performance, liquidity, commitments and long-term obligations. The Financial Report provides the same disciplined financial perspective for the federal government.
Why This Matters to Arizona CPAs Arizona CPAs help clients interpret complex financial information and explain what it means in one of the nation’s fastest growing and most dynamic state economies. Whether advising closely held businesses, publicly traded companies, healthcare organizations, nonprofit organizations, tribal enterprises, municipalities, school districts, or rapidly expanding technology and semiconductor companies, the Financial Report offers valuable insights to broaden their perspective. Federal fiscal decisions influence many aspects of Arizona’s economy, including defense and aerospace, semiconductor manufacturing, water infrastructure, public lands, Native American communities, international trade with Mexico, transportation, health care and retirement programs. Understanding the federal government’s audited financial statements can therefore provide valuable context for many of the economic and financial issues affecting Arizona businesses and residents. The mission of the Arizona Society of Certified Public Accountants is to advance the profession through
education, professional excellence, advocacy and service. Becoming familiar with the Financial Report is consistent with that mission. It expands our understanding of governmental financial reporting while reinforcing the profession’s longstanding commitment to transparency, accountability and informed financial decision-making.
An Opportunity for Professional Growth Many CPAs regularly read the annual reports of public companies, governmental entities, nonprofit organizations and clients. America’s audited annual report deserves similar attention. It is one of the few documents that brings together the federal government’s audited financial statements, management’s discussion and analysis, long-term fiscal projections and independent audit findings in a single, comprehensive publication. Whether your professional practice includes auditing, financial reporting, taxation, consulting, education, governmental accounting or executive leadership, the report provides valuable insight into the financial reporting of one of the world’s largest governmental entities. As CPAs, we understand the value of audited financial statements. The Financial Report of the United States Government provides an opportunity to apply that professional perspective to one of the nation’s most significant public financial documents. Whether you agree or disagree with current fiscal policies, understanding the federal government’s audited annual report will broaden your perspective on governmental financial reporting and strengthen your appreciation for one of the most comprehensive financial reports produced each year. l About the Author - Michael G. Doorley, CPA (NY), is an advocate for federal financial civics who translates the annual Financial Report of the United States Government into plain language. He helps Americans and others understand the federal government’s complete financial picture by making complex federal reporting understandable to every engaged citizen. He may be contacted at michael@ michaeldoorley.com
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The ASCPA Happenings: A Recap Annual Meeting & Awards Ceremony – May 7 The ASCPA held its Annual Meeting & Awards Ceremony at the Westin Kierland in Scottsdale on May 7. We had over 200 attendees as we recognized our past chair, Eugene Park, award winners Mike Allen (Life Member), Kevin DeMenna (Honorary Member), and Excellence in Teaching recipients Lynn Clark and Landi Morris. We also celebrated the past year and looked ahead to the future with insights from ASCPA President and CEO Oliver Yandle, and guest speaker AICPA Vice President of Advocacy Mark G. Peterson. Thank you to all attendees, and congratulations to the awardees.
Spring Finance Mixer – May 13 Banks and CPAs mixed it up in May at the Phoenix Country Club for an evening of engaging conversations, connection and collaboration. We co-hosted the event with the Risk Management Association – Arizona Chapter, which provided a lively evening for the finance community to network. Special thanks to sponsors: Trinet, Statewide CDC, and Old Republic Title Agency. Don’t miss the ABC Networking event on November 18 at the Arizona Biltmore. Register now at www.ascpa.com/abc
Exam Prep Session – May 15 Thank you to Gleim Exam Prep for partnering with us to bring this exclusive, in-person CPA exam prep session to our members. We walked through the exam-style questions, test-taking strategies and practical tips to tackle sections like FAR, AUD and REG. We are grateful for the students and candidate members who attended this special event.
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CPE Giveback – May 19
Not-for-Profit Conference – June 25 CPAs took to the Capitol We wrapped up another successful NPC. With over 170 attendees, we had a packed venue. Attendees earned up to 8 CPE credits, made connections and participated in five raffles by visiting each sponsor table to stamp their NPC passport. Thank you to our incredible sponsors who made this event possible. Premium Sponsors: Eide Bailly and Justworks Gold Sponsors: Abdo, Alera Group, Alerus, CBIZ, Fester & Chapman PLLC, Ma’atIT and Paychex.
Over 400 ASCPA members logged on for a day of free CPE. In honor of National Accounting Day, the ASCPA hosted its first CPE Giveback of the year, providing six hours of free CPE credits. Thank you to sponsors Bayntree Wealth Advisors, FlyFin, IP Services and Stuart Berry Financial LLC. Our next CPE Giveback Day will be November 10. Register now at www.ascpa. com/giveback
Women’s Collective – July 23 Women in finance gathered at the Phoenix Art Museum to level up their leadership skills. Joined by guest speakers Sasha Simmons and Alisha Pennington, we hosted three sessions for attendees to learn how to lead without a blueprint, exit strategies and a workshop to learn from one another. Attendees entered raffles, received book giveaways from Susan Scott of Fierce, got free massages and toured the museum’s exhibits. Thank you to our sponsor, Beacon Pointe, for being a part of this incredible experience.
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PRSRT STD U.S. Postage PAID Tucson, Arizona Permit No. 271 410 N. 44th St. Ste 205 Phoenix, AZ 85008