Issuu

AZICPA November 2026

For CPAs by CPAs

ESOPs, Opportunity Zones, Investigative Fraud and OBBBA: The 2026 Developments

Where Are They Now? How scholarships strengthen the pipeline

Unlock the Mystery of Tax Available for preorder — the Arizona Tax Guide

The Arizona Society of Certified Public Accountants y www.ascpa.com

HELP YOUR CLIENTS CHANGE A FOSTER CHILD'S FUTURE. ARIZONA FOSTER CARE TAX CREDIT

MARRIED FILING JOINTLY

SINGLE

$1,262

$632

DOLLAR-FOR-DOLLAR ARIZONA TAX CREDIT.

azhope.com LEARN MORE AT

"I encourage Arizona tax professionals to share this opportunity with their clients." - JAN BREWER Arizona's 22nd Governor

Your Arizona Tax Liability and Donations Create Tuition Scholarships! 99% Graduation Rate

96% Matriculate to Higher Education, Trade School, or Military Service

“I know how to listen for God’s voice.” -Mariah, Student

1000s of Service Hours Provided to the Community

Three Ways You Can Change a Life Through Arizona Tax Credits and traditional donations, underserved families can access quality education that best meets the unique needs of their children.

1. AZ Individual Tax Credits

Redirect your AZ tax liability to CEA and receive a dollar-for-dollar tax credit! Tax Credit contributions are used exclusively for tuition scholarships at K-12 Diocese of Phoenix Catholic Schools.

Contribute any amount up to: Single Filer for 2026

$1,571

Joint Filer for 2026

$3,131

Contribute By

4/15/2027

2. AZ Corporate Tax Credits

Arizona S & C Corporations, and Insurance Companies that pay Arizona premium tax may direct 100% of their Arizona liability through the Low Income and Disabled/Displaced dollar-for-dollar tax credits! Join hundreds of corporate contributors investing in future leaders!

3. Changing Lives With Legacy Traditional Donations

We accept cash donations, gifts of stocks and bonds, Donor Advised Fund grants, IRA charitable rollover, bequests, charitable gift annuities, and more.

It’s Easy. Call Us Today! 602-218-6542 WWW.CEAZ.ORG Catholic Education Arizona is an IRS 501(c)(3) nonprofit charitable organization and has never accepted gifts designated for individuals. Per state law, a school tuition organization cannot award, restrict or reserve scholarships solely on the basis of donor recommendation. A taxpayer may not claim a tax credit if the taxpayer agrees to swap donations with another taxpayer to benefit either taxpayer’s own dependent.

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

AZ CPA NOVEMBER 2026

AZICPA Volume 42 Number 4

For CPAs by CPAs Where Are They Now? Unlock the Mystery of Tax

November 2026

Features

ESOPs as a Succession Strategy By CariAnn J. Todd, CPA

rizona Conformity to the 13 AOne Big Beautiful Bill Act: The 2026 Developments By Edward K. Zollars, CPA

Columns & Departments Quick Quiz

Chair’s Message by Joseph L. Heidleburg, CPA

Member News

elebrating ASCPA 17 C100% Club Members Are They Now? 18 WByhere Rosa Hernandez Biggest Threat to 23 TaheFraud Investigation

Isn’t Always the Fraudster By Lavan Sarat Pattii, CPA, CIMA, CGMA, LLB, CA (India), CMA (India)

29 Certifications Beyond the CPA pportunity Zones: How Census 31 OTract Changes Affect Eligibility and Planning

By Matthew Dunscombe, Keith Wieser, and Carey Heyman

410 N. 44th St. Ste 205 Phoenix, AZ 85008 www.ascpa.com

35 The ASCPA Happenings: A Recap NOVEMBER 2026 AZ CPA

ASCPA Chair’s Message

Joseph L. Heidleburg, CPA Chair, Arizona Society of CPAs International Accounting Manager Align Technology, Inc.

As 2026 comes to a close, I wanted to use this article to reflect on my journey with this year’s hottest topic: artificial intelligence. It is almost impossible to escape discussions about AI. Every day, I read an article or hear a new perspective on how it is transforming the way we live and work. Interestingly, as I write this, some leaders of AI companies are suggesting that development may be moving too quickly and should slow down. That is quite a contrast to earlier this year, when the hype surrounding AI seemed limitless and predictions about how dramatically it would change our lives dominated the conversation. Within the accounting profession, opinions remain equally diverse. I have heard predictions ranging from AI replacing accountants within a few years to comparisons with Excel decades ago: a powerful tool that will enable professionals to accomplish more rather than replace them entirely. This year has been the one with the most extensive use of AI in my life. Personally, I have used it to research a new car purchase, create custom images of my dogs and assist with wedding planning. In many situations, it has largely replaced traditional internet searches as my starting point for research. Professionally, my company encouraged employees to explore ways AI could simplify their work. Like many people, my initial approach was to tackle a large and complex challenge all at once. I uploaded my most difficult deliverable and simply asked AI for ideas. The results were underwhelming and, more importantly, not scalable. Fortunately, my organization also provided training on effective AI usage. One lesson stood out: start small and be specific. Applying that advice, I narrowed my focus to a smaller component of my work: preparing flux commentary. At first glance, the output appeared comparable to something I might have written myself. However, a closer review revealed that the AI had hallucinated portions of the commentary and simply guessed at certain amounts. The experience reminded me of working with an entry-level staff member. The potential is obvious, but the work still requires review, coaching and guidance. After refining my prompts and providing more detailed instructions, the quality improved significantly. Eventually, the output reached a level comparable to my own work. One phrase I heard at the AICPA Spring Council captured the experience perfectly: humans should not merely be “in the loop”; they need to be “in the lead.” AI can be incredibly helpful, but it still requires oversight, judgment and accountability from the professionals using it. Where AI has delivered the greatest value for me is in accounting research and communication. Recently, I needed to research a technical accounting issue involving intercompany loans being treated as an investment. I provided Copilot with the relevant Accounting Standards Codification (ASC) reference and requested a detailed summary. What impressed me most was not simply the initial response, but the ability to continue the conversation. I could ask follow-up questions, explore alternative scenarios, and even request examples tailored to my organization’s accounting structure. Each follow-up built upon the previous response, creating a far more interactive research process than traditional methods. The Arizona Society of CPAs continues to support members through events such as the Converge Conference, where this year the main topic was AI, with discussions around new tools, best practices, governance and responsible use. I expect even more programming around these topics in the new year. As we head into 2027, I suspect AI adoption will continue to accelerate, regardless of whether technology companies choose to slow development. For our profession, the real opportunity is not deciding whether AI will become part of our profession. It already has. The challenge is learning how to use it effectively without sacrificing the quality of the work produced. l

Best Wishes, Joe Heidleburg 6

AZ CPA NOVEMBER 2026

Staff & Member News Andrea Beth Levy, CPA, CFE, CGMA, MBA started a new job at Rosie’s House — a nonprofit music school as CFO & COO at the end of September 2026. Haynie has been ranked number 94 on INSIDE Public Accounting’s (IPA) 2026 Top 100 Firms list. Osuch Consulting PLLC has recently changed its name to Osuch Fang Advisory PLLC (OFA). If you would like your news highlighted in the next issue of the ASCPA magazine, please submit member news to advertise@ascpa.com by November 20.

Thank You, Members! This November and beyond, we proudly celebrate your membership and invaluable contributions. On November 10, International Accounting Day, take advantage of six hours of complimentary CPE webinars. Join us for all sessions to earn up to 6 CPE credits or attend only the topics that interest you most. Register at www.ascpa.com/giveback Plus, in appreciation for the vital role you play in keeping businesses strong and our communities thriving, we are hosting a member giveaway — visit the Connect site for details.

NOVEMBER 2026 AZ CPA

Navigating Your CPA Firm’s Sale with Expertise, Integrity, and Results.

Together, We're Building Brighter Futures

Why Choose Us?

Berkshire helps CPA principals exit their practice.

Expertise in the nuances of selling traditional, multi-

We exclusively specialize in the valuation, preparation, packaging, and nationwide marketing of CPA firms to find an ideal successor. We have extensive experience in acquisitions, mergers, and partnership transitions. We pride ourselves on helping clients move through the complex decisions to reach their goals. Ryan Gipple will personally handle every deal that comes into our office.

discipline, and virtual CPA firms Experience in navigating the complex and ever changing buyer marketplace Fiduciary to the seller with pre-sale consultation, valuation and a strategic marketing plan National, regional and local exposure to a robust and active buyer network Excellent reputation & confidential process

About the Principal, Ryan Gipple

Recent Client Testimonial Ryan is, without question, the best broker I’ve ever worked with. I’ve acquired firms through the three largest brokerages in Arizona, including Ryan, and when it came time to sell my own firm, I chose him

Ranked in the top echelon for CPA practice sales in Arizona Industry leader with award-winning success Broker of the Year, Presidents Club, Award of Excellence 15 years of M&A experience with CPA firms Accomplished speaker, blogger, and strategist for CPA exit Local to Arizona

again. He sold it for more, and with more cash out at close than I ever imagined. In an industry where ethical shortcuts can be prevalent, Ryan’s commitment is unwavering: "Be honest. It will all come out in the end." Unlike most brokers who passively wait for buyers, Ryan actively and strategically pursues them. His expertise in the accounting industry is unparalleled!

Ryan Gipple Principal (602) 614-3583 berkshirebsa.com ryan@ryangipple.com

Scan for more information

ESOPs as a Succession Strategy By CariAnn J. Todd, CPA

Employee Stock Ownership Plans (ESOPs) have evolved from a niche employee benefit arrangement into a powerful succession planning tool for business owners. Despite more than four decades of legislative support and a substantial body of professional guidance, many CPA practitioners encounter ESOPs only occasionally. As a result, owners considering an exit often hear discussions dominated by private equity, strategic acquisitions, or family succession, while ESOPs receive little attention.

Continued on next page...

NOVEMBER 2026 AZ CPA

For CPA firms advising closely held businesses, this represents both a challenge and an opportunity. An ESOP will not be the right solution for every client, but for the right company, it can provide liquidity for owners, meaningful retirement benefits for employees, favorable tax treatment and preservation of company culture. ESOPs also create opportunities for CPA firms to provide substantial compliance and advisory services before and after the transaction.

Understanding the ESOP An ESOP is a qualified defined contribution retirement plan that invests primarily in employer stock. The company contributes cash or stock to the ESOP, and shares are allocated to participant accounts based on compensation, service or both. Vesting commonly occurs over a five-year period and distributions follow structured plan rules. The economic objectives of ESOPs and 401(k) plans are fundamentally different. A 401(k) is designed to build retirement savings through participant-directed investments, while an ESOP serves as both a retirement benefit and an ownership transition mechanism. The value of participant accounts is driven primarily by company performance rather than capital market performance. In addition, ESOPs create significant impacts on governance, fiduciary oversight and long-term corporate strategy that 401(k) plans do not.

Identifying ESOP Candidates Not every company is well-suited for an ESOP transaction. Successful ESOP companies generally exhibit stable EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) over $1.5M, minimal debt, predictable cash flow and a strong management team. The owner is seeking a succession solution while simultaneously wanting to preserve the culture and legacy of the business. CPAs should be particularly attentive when evaluating EBITDA.

AZ CPA NOVEMBER 2026

Owner compensation structures, discretionary spending, and aggressive tax planning often distort historical earnings. Companies with low reported profitability may actually be excellent ESOP candidates after normalization. Beyond financial metrics, owner objectives frequently drive the analysis. • Does the owner want immediate liquidity? • Does the owner want to remain involved — post-transaction? • Is preserving company culture important? • Is maximizing purchase price the dominant objective? The answers determine whether an ESOP is a viable option or if alternative exit strategies deserve greater emphasis.

Comparing ESOPs with Other Transactions The most common alternative to an ESOP today is a sale to private equity or a strategic acquirer. Understanding the trade-offs helps frame the discussion objectively. ESOP transactions appeal to owners who seek management continuity, cultural preservation and employee participation in future growth. They can allow existing leadership teams to maintain greater influence over company direction. In many fully ESOP-owned S corporation structures, income can become exempt from income taxation, creating economic benefits and potentially a competitive advantage. However, these advantages come with meaningful tradeoffs. ESOP sale prices are frequently lower than those available from strategic buyers or private equity groups. Additionally, a large portion of the transaction value may be financed through seller notes, often representing 60% to 85% of the overall purchase price, subordinated to bank debt. Many transactions require the seller’s ongoing involvement. By contrast, private equity transactions often offer higher

valuations, greater upfront cash and faster execution. Sellers frequently achieve a cleaner exit. Private equity firms may also provide access to growth capital and enhanced governance structures for companies that lack a strong management team. New owners may implement operational changes, shift decisionmaking authority, focus on profitability metrics and seek a secondary exit within a relatively short investment horizon. In some cases, company culture may change and the Section 1042 gain deferral is not available for these transactions.

The ESOP Transaction Many business owners underestimate both the complexity and expense of an ESOP transaction. A typical transaction begins with feasibility analysis and modeling, followed by valuation work and financing discussions. Due diligence, negotiation and implementation can extend the timeline across several months to beyond one year. Professional fees and related costs incurred in transactions commonly fall between two and four percent of the sale price. For a $20M transaction, this translates to $400$800 thousand. The process involves numerous specialized professionals, including investment bankers, ESOP attorneys, lenders, trustees, independent valuation firms and tax advisors. The trustee serves as a fiduciary representing plan participants and must ensure the ESOP does not pay more than fair market value for the shares. Independent appraisers support this determination through valuation analyses performed at closing and annually. These transactions demand high levels of interdisciplinary coordination. As a result, CPAs often help clients navigate competing priorities among tax, valuation, financing and operational considerations.

Tax Planning Opportunities Tax considerations remain one of the most compelling aspects of an

ESOP transaction. Owners frequently receive a combination of upfront cash, sellerfinanced notes, warrants and stock appreciation rights (SARs) as part of the package. For C and S corporation shareholders, a traditional stock sale generally results in capital gain treatment, subject to federal and state taxation and potential net investment income tax exposure. Only stock can be sold to an ESOP. This doesn’t preclude other entity types from an ESOP transaction, rather requires additional tax strategy. For a C corporation, IRC Section 1042 can dramatically alter the result. When statutory requirements are satisfied, gain can be deferred through reinvestment in qualified replacement property. Among other requirements, the ESOP must own at least 30% of the company following the transaction, satisfy a three-year holding period requirement and replacement investments must meet specific statutory criteria. The reinvestment window is limited, making careful planning essential. S corporations are not left out if gain deferral is the seller’s objective. Through careful tax planning, S corporation owners can convert to C corporation status, enabling them to take advantage of Section 1042 gain deferral. The long-term objective often involves achieving 100% ESOP ownership within an S corporation structure to avoid income taxation, freeing cash flow for debt service, operations and the ESOP repurchase obligation.

Leveraged ESOP Economics Most ESOP transactions are leveraged. Typically, a bank provides financing to fund a portion of the sales price ranging from 15-40 percent. The remaining consideration is through seller financing, subordinated to bank debt. Interestonly structures frequently exist until bank debt is repaid. Some owners pursue the sale of tranches over time rather than full

exits to reduce financing needs, lower the debt service requirements and allow sellers to participate in future appreciation.

Annual Compliance Closing the transaction is just the beginning. Annual ESOP administration creates recurring compliance requirements. Typical annual costs may include financial statement services, business valuation updates, ESOP administration, trustee fees and legal counsel, with total annual expenses often ranging from approximately $50-$200 thousand. The annual valuation process drives numerous financial reporting and plan administration activities. Share value affects ESOP accounting adjustments, warrant and SARs valuation, participant account balances and distribution calculations. Valuation drivers generally include EBITDA and EBITDA stability, revenue growth, cash flow, leverage, customer diversification, economic conditions and management quality.

Life After the Transaction Perhaps the most overlooked aspect of an ESOP transaction is what happens after closing. Tax minimization no longer dominates decision-making. Executive compensation and related party arrangements receive scrutiny. Trustees and boards play more prominent governance roles, and management must become increasingly sophisticated in financial analysis and forecasting. Long-term thinking becomes essential. Financially, companies often carry significant debt and covenant requirements. Cash management becomes critical. Additional borrowing for capital expenditures can affect both covenant compliance and share value. Companies must also understand ESOP-specific accounting concepts, including leveraged ESOP reporting and funding obligations associated with future participant distributions from the ESOP.

The repurchase obligation warrants particular attention. As participants retire, terminate employment or otherwise become entitled to distributions, companies must provide cash funding to facilitate those payments via contributions to the ESOP. Growing share values and annual share allocations can cause these obligations to balloon over time. Effective forecasting is indispensable.

The CPA’s Opportunity ESOPs represent far more than a specialized retirement plan. They are complex ownership transition structures that touch virtually every discipline within public accounting. Tax professionals assist with transaction structuring, Section 1042 analysis, owner tax planning and ongoing compliance. Assurance professionals provide assurance services for company financial statements and ESOP audits. Advisory teams contribute valuation oversight, cash flow analysis and governance recommendations. CPAs are often the first trusted advisors business owners consult when discussing succession planning. That places our profession in a unique position to ensure clients understand available options. An ESOP is not always the right answer. Sometimes private equity, a strategic acquisition or another succession path will better satisfy the owner’s objectives. But CPA’s advising closely held businesses should be able to identify situations where ESOPs deserve consideration and know when to bring specialized expertise into the conversation. Awareness alone can create significant value for clients while expanding the advisory opportunities for the CPA firm. l CariAnn Todd is a Principal and COO of the A&A Department at BeachFleischman PLLC. She has been working with ESOP-owned companies since 2000. BeachFleischman provides compliance and advisory services to ESOP-owned companies as well as audits of ESOP plans. CariAnn can be reached at ctodd@beachfleischman.com.

NOVEMBER 2026 AZ CPA

2027

ARIZONA

TAX

GUIDE Your Guide to Unlocking the Mystery of Tax for Arizona CPAs

4-Volume Set Pre-order by December 15 Save $20 at checkout

ascpa.com/aztaxguide

Arizona Conformity to the One Big Beautiful Bill Act: The 2026 Developments By Edward K. Zollars, CPA

When this publication last surveyed the business tax provisions of the One Big Beautiful Bill Act (Pub. L. No. 119-21 (July 4, 2025)) in March, the open question for Arizona practitioners was not what the federal law said but whether Arizona would follow it. That question consumed most of the Second Regular Session of the Fifty-seventh Legislature and was not answered until June. Continued on next page...

NOVEMBER 2026 AZ CPA

higher federal standard deduction into the 2025 Arizona forms and to provide instructions for claiming a “Middle Class Tax Cuts Package” — the $6,000 senior deduction and deductions for tips, overtime and car loan interest — on the “other” subtractions line. The Department followed that direction and opened the filing season on forms that assumed conformity the Legislature had not yet enacted (ADOR news releases of January 22 and January 30, 2026). The Legislature’s first conformity vehicle, S.B. 1106, was vetoed on January 16, 2026, and a second, H.B. 2785, was vetoed on February 12, 2026; in both cases, the Governor’s stated objection was to

the business provisions of the federal act rather than to conformity as such (KPMG, This Week in State Tax, Jan. 26 and Feb. 23, 2026). Conformity was ultimately enacted as part of the budget. H.B. 4168 (companion S.B. 1861), “taxation; omnibus; 2026-2027,” was signed on June 13, 2026 and became Laws 2026, ch. 140. It moved the conformity date to January 1, 2026, adopted the retroactive effective dates of Pub. L. No. 119-21, and added a set of Arizona-specific additions and subtractions. The table below summarizes the businessrelevant results and the governing Arizona authority.

Federal Provision (OBBBA)

Arizona Treatment and Primary Authority

Arizona Effective Date

Conformity date generally

A.R.S. § 43-105(A) now defines the “internal revenue code” as the Code in effect on January 1, 2026, “with the specific adoption of all retroactive effective dates,” and A.R.S. § 43105(B) through (D) separately adopt the provisions of Pub. L. No. 119-21 that are retroactively effective in tax years beginning after December 31, 2021 (Laws 2026, ch. 140, § 12).

T.Y. 2026 forward, with adoption of OBBBA retroactive provisions reaching back to T.Y. 2022.

Sec. 11021 — Domestic R&E expensing (IRC § 174A)

No Arizona modification is required. Because A.R.S. § 431001(2) starts individuals at federal adjusted gross income and A.R.S. § 43-1101(1) starts corporations at federal taxable income, § 174A expensing flows through automatically. The retroactive-date language in A.R.S. § 43-105 means the smallbusiness retroactive elections and method changes under Rev. Proc. 2025-28 also carry to Arizona.

T.Y. beginning after Dec. 31, 2024; retroactive smallbusiness elections reach T.Y. 2022–2024.

Sec. 11031 — § 163(j) business interest (EBITDA ATI)

Conforms automatically through the federal starting points in A.R.S. §§ 43-1001(2) and 43-1101(1). Laws 2026, ch. 140 added no addition or subtraction under A.R.S. §§ 43-1021, 43-1022, 43-1121 or 43-1122.

T.Y. beginning after Dec. 31, 2024.

Sec. 11012 — § 179 expensing ($2.5M / $4M)

Conforms automatically; Arizona has no separate § 179 dollar cap in Title 43. The inflation-adjusted 2026 amounts (Rev. Proc. 2025-32) also apply for Arizona purposes.

T.Y. beginning after Dec. 31, 2024.

Sec. 11011 — Permanent 100% bonus depreciation (IRC § 168(k))

Split treatment and Laws 2026, ch. 140 did not change it. Ongoing; longstanding Individuals and pass-through owners add back all § 167(a) law unchanged by the depreciation under A.R.S. § 43-1021(11) and subtract depreciation 2026 legislation. computed “as if the additional allowance for depreciation had been the full amount allowed pursuant to section 168(k)” under A.R.S. § 43-1022(17)(e) — full conformity. Corporations add back § 167(a) depreciation under A.R.S. § 43-1121(4) and subtract depreciation computed “as if the election described in section 168(k)(7) . . . had been made” under A.R.S. § 43-1122(20) — no bonus depreciation for Arizona corporate purposes.

Arizona is a static conformity state. A.R.S. § 43-105 fixes the version of the Internal Revenue Code that Title 43 incorporates, and the state’s computation begins with a federal number: “Arizona gross income” of an individual is federal adjusted gross income (A.R.S. § 43-1001(2)), and “Arizona gross income” of a corporation is federal taxable income (A.R.S. § 43-1101(1)). Until the conformity date moved, the entire OBBBA package sat outside the Arizona base. The 2026 sequence was unusually contentious. Governor Hobbs issued Executive Order 2025-15 on November 25, 2025, directing the Department of Revenue to build the

AZ CPA NOVEMBER 2026

Federal Provision (OBBBA)

Arizona Treatment and Primary Authority

Arizona Effective Date

Sec. 11022 — Qualified production property (IRC § 168(n))

Arizona decouples prospectively. New A.R.S. § 43-1021(17) requires an addition for “the amount of the special depreciation allowance for qualified production property allowed pursuant to section 168(n)” (Laws 2026, ch. 140, § 14). No parallel addition was added to A.R.S. § 43-1121, and A.R.S. § 43-1122(20) is drafted by reference to § 168(k)(7) only.

Addition applies to T.Y. beginning after Dec. 31, 2025. For T.Y. 2025, § 168(n) flows through to Arizona.

Sec. 11041 — Permanent QBI deduction (IRC § 199A)

No Arizona benefit. The § 199A deduction is allowed under IRC N/A — no Arizona § 63(b)(3) in computing taxable income, not under IRC § 62 conformity mechanism. in computing adjusted gross income, so it never reduces the federal AGI starting point in A.R.S. § 43-1001(2). Laws 2026, ch. 140 created no corresponding Arizona subtraction.

Secs. 70201, 70202 — Tips and overtime (IRC §§ 224, 225)

Arizona enacted express subtractions because these deductions are also allowed under IRC § 63, not § 62, and therefore do not reduce federal AGI: A.R.S. § 43-1022(31) (qualified tips deducted under § 224) and § 43-1022(32) (qualified overtime compensation deducted under § 225) (Laws 2026, ch. 140, § 15).

T.Y. beginning after Dec. 31, 2024.

Senior deduction (IRC § 151(d)(5)); vehicle loan interest (IRC § 163(h)(4))

A.R.S. § 43-1022(35) allows a subtraction for the amount deducted for a qualified individual under IRC § 151(d)(5) (C); A.R.S. § 43-1022(36) allows a subtraction for qualified passenger vehicle loan interest deducted under IRC § 163(h)(4).

T.Y. beginning after Dec. 31, 2024 (the vehicle loan interest subtraction is limited to T.Y. 2025).

SALT deduction cap (IRC § 164(b)(6))

Arizona decouples from the increased federal cap. A.R.S. § 43-1042, as amended by Laws 2026, ch. 140, § 17, limits the Arizona itemized deduction for state and local taxes to $10,000.

T.Y. beginning after Dec. 31, 2025.

Secs. 11051, 11062 — § 461(l) excess business losses; § 1202 QSBS

Both conform automatically. The § 461(l) disallowance and the Same as federal. § 1202 exclusion operate in arriving at federal AGI and federal taxable income, and Arizona adopted no modification for either.

Arizona-only: state R&D and other credits

Laws 2026, ch. 140 repealed the refundable portion of the Arizona research credit, shortened the carryforward from 15 to 10 years and reduced post-2030 rates (A.R.S. §§ 43-1074.01, 43-1168); repealed the credit for new employment (A.R.S. § 43-1074) and the corporate pollution control credit (A.R.S. § 43-1170).

Points that Deserve Particular Attention

no Arizona benefit unless the Legislature writes a subtraction. That is precisely why A.R.S. § 43-1022(31), (32), (35) and (36) exist and why § 199A, which received no such subtraction, remains a purely federal benefit.

• The § 62 versus § 63 distinction drives Arizona results. Arizona begins at federal adjusted gross income for individuals, so a federal deduction allowed in computing taxable income under IRC § 63 — the QBI deduction, the tips and overtime deductions, the senior deduction and the car loan interest deduction — produces

• The bonus depreciation split is the largest structural divergence. Permanent 100% bonus depreciation reaches Arizona individuals and pass-through

T.Y. beginning after Dec. 31, 2025 (carryforward change applies to T.Y. after Dec. 31, 2021).

owners in full under A.R.S. § 43-1022(17)(e), but A.R.S. § 431122(20) continues to compute the corporate subtraction as though the election out of bonus under IRC § 168(k)(7) had been made. Entity choice modeling that assumes uniform Arizona cost recovery will be wrong for C corporations (see also Bloomberg Tax, State Conformity to Federal Bonus Depreciation). Continued on next page...

NOVEMBER 2026 AZ CPA

• There is a one-year window for qualified production property. The new addition in A.R.S. § 43-1021(17) applies only to taxable years beginning after December 31, 2025, so a § 168(n) allowance claimed for a 2025 taxable year flows through to Arizona without adjustment. Whether the corporate subtraction formula in A.R.S. § 43-1122(20), which references only § 168(k)(7), operates to restore a § 168(n) allowance added back under A.R.S. § 43-1121(4) is not addressed in the statutory text and should be confirmed with the Department. • Retroactive research expenditure elections carry to Arizona. Because A.R.S. § 43-105(B) through (D) adopt the retroactive provisions of Pub. L. No. 119-21 for taxable years back to 2022, a small business making the retroactive § 174A election under Rev. Proc. 2025-28 changes its Arizona base for those years as well. • Amended 2025 Arizona returns remain a live issue. The Department stated that taxpayers who filed on the executive-order forms and later need to conform would have until October 15, 2027, to amend without penalty or interest. As of the date of this article, the Department had not published a post-enactment conformity notice in its news center, and its “Conformity to IRC” page had not been updated past the 2024 taxable year. Practitioners should expect revised 2025 schedules and instructions before relying on software defaults. l Edward K. Zollars, CPA is a partner in the Phoenix CPA firm of Thomas, Zollars & Lynch, Ltd. as well as writing and presenting continuing education programs for CPAs on tax matters. This article was prepared with the assistance of Claude Cowork.

AZ CPA NOVEMBER 2026

Celebrating ASCPA 100% Club Members The Arizona Society of CPAs is proud to recognize the organizations that make membership a priority for every eligible CPA on their team. Your participation in the 100% Club reflects a strong investment in your professionals, your organization and the future of Arizona’s CPA community. Thank you for strengthening the profession through your continued support of the ASCPA.

Abbott Company, Ltd. Abdo, LLP Accuracy CPA, PLLC Alyx Cohan CPA, PC Andersen & Sarnowski, P.C. Anne Cornelius, CPA, PC Anthony Choi, CPA Aprio Advisory Group, LLC Arevon Energy Assure Trust NOW, LLC Baker Tilly US, LLP BeachFleischman PLLC Benjamin H Field CPA, PC Benjamin T Koeller CPA, PLLC Black & Soli, P.C., CPA Boudreau Consulting LLC Busby Sanford Brady CPAs, PLC Cary Millar, PC CBIZ Advisors, LLC Charles L. Hummel, CPA PC CHS Tax & Business Services, PLLC CliftonLarsonAllen LLP Colby & Powell, PLC Concierge Consulting and Accounting, PLLC Conover Asay CPAs, PLLC CPA Financial Advantage, P.C. Curosh Law Group, PLLC CW Clarke Ltd Daniel A. Calabro, CPA, PLLC Darin Guthrie, CPA, PLLC David Lipinski, CPA, PC DeBenedetti & Co., PLLC Delores I. Nance CPA, P.C. Dickman & Company CPAs PC Douglas J Kingston CPA /International & Accounting Eaton & Kasprzyk CPAs, PC Eaton-Cambridge Inc. Eide Bailly LLP Emelia Mensa, CPA Evers Lopez Ltd. EY Forever Living Products International, LLC Forvis Mazars Four Leaf Accounting Frost, PLLC Gary L Williams, CPA, CGMA Hammond, Travers & Tuttle PC

Hanagan CPA, PLLC Haynie & Company HBL CPAs, P.C. Heinfeld, Meech & Co., P.C. Herb Anderson CPA, LLC HH CPA LLC Horne & Company, LLC Hunter Hagan & Company, Ltd. Ignite Accounting LLC Insight Enterprises, Inc. Jaffa Simmons, PLLC Jansen & Company CPAs, PLLC Joanne M. Elsen CPA, PC John Heard, CPA, LLC Johnson Goff, PLLC Karpinski, Bernstein & Adler, PLC Keegan Linscott & Associates, PC Kent O. Utter, CPA Landmark PLC, CPAs Laura S. Leopardi, CPA, PLLC Lisa M. Smith, CPA Lohman Company, PLLC LT Gagnon PLC Ludwig Klewer & Rudner, PLLC Lumbard Consulting, LLC Mansperger Patterson & McMullin, PLC Mariner LLC Marley Management Corporation Martinez & Shanken, PLLC Mary Beth Wifler, CPA McGrath Nothman, PC Mesquite Tax LLC Michael S. Patinella, PLLC Minniti CPA LLC Monica J. Stern, CPA, PLLC Ng Accounting, P.L.L.C. Nordstrom & Associates, P.C. O’Malley & Berberich CPAs, PC O’Neil & Steiner, PLLC On-Call Controller Osiris CPA PLLC Pescatore Cooper, PLC R&A CPAs R. Michael Beltran, CPA R.C. Thornton Accounting Group, LLC Randy C. Kiesel, CPA, PC RC Acosta & Associates, CPAs REDW LLC

Regier Carr & Monroe LLP, CPAs Robert Martin, CPA, Ltd Roediger Hoff, PLC RSM US LLP Sandra A. Turner, CPA, PC Sandra L. Reed, CPA Saunders Company, Ltd Seby & Associates, Ltd., CPAs Sechler Morgan CPAs PLLC Seely, Mullins & Associates, PC Semple, Marchal & Cooper, LLP Shaffer & Danker, CPAs, PC Shippen, Pope & Associates PLLC Simmons Tax & Accounting Services LLP Singer Tax & Accounting, P.C. Skinner Clouse Group PLLC Slater & Rutherford, PLLC Splaver, Splaver & Kasten, CPA, PLC Springsteel Investment Advisors, LLC Tess L. Ridgway, CPA The Ruboyianes Company, PLLC Thomas L Dunbar CPA Ullmann & Company, P.C. Urke & Stoller, LLP Valerie A. Lubken PLLC Vearle M. Jones, CPA Walker & Armstrong, LLP Wallace, Plese + Dreher, LLP Weech Financial, PLLC William M. Perius, CPA WS Weiss CPA PC YB Company LLC Organizations with 100% CPA membership show employees, clients and the profession that they are committed to connection, growth and excellence. Participating organizations receive additional ASCPA benefits at no extra cost while demonstrating their support for Arizona’s CPA community. Learn more at www.ascpa.com/100club. We make every effort to ensure this list is accurate. If your organization’s name is missing, listed incorrectly or if you have questions about the 100% Club, please email membership@ascpa.com.

NOVEMBER 2026 AZ CPA

Where Are They Now? by Rosa Hernandez

The Arizona Foundation for Innovation and Education supports students pursuing accounting. Every year we award numerous students scholarships to support their academic endeavors. But what happens after they get the scholarship? Here are five scholarship recipients and where they are now.

COLIN ROSE, CPA When Colin Rose was a junior at Northern Arizona University, his governmental accounting professor, Robin Mosness, introduced him to the AZ CPA Foundation scholarship. Mosness encouraged him to apply and inspired him to become a member of the ASCPA. The opportunity came at an important point in Rose’s education as he prepared to enter his senior year and take the next steps toward a career in accounting. The scholarship also introduced him to the ASCPA and the value of staying connected to the profession beyond the university classroom. Today, Rose has graduated from NAU, earned his CPA license and is building his career in public accounting. He is entering his second year as an auditor at BeachFleishman, PLLC. For Rose, becoming an ASCPA member was about more than the scholarship itself — it was a way to remain connected to the profession and continue learning. As he transitioned out of college, he recognized that he would no longer have the same access to professors and classmates who could keep him informed about accounting news and developments. ASCPA membership gave him a way to stay up to date and connected with the profession. When he’s not working, Rose has a passion for the big screen. An avid moviegoer, he enjoys seeing new films in different theaters and searching for older movies at thrift stores and antique malls. It’s a hobby that gives him a chance to slow down and unwind outside of work. Colin Rose has been an official ASCPA member for two years.

ANNIE FRANK, CPA Annie Frank first learned about the AZ CPA Foundation scholarship from Katie Maxwell, her professor at the University of Arizona’s Dhaliwal-Reidy School of Accountancy. Maxwell sent information about the scholarship to the accounting majors, and Frank applied the year before beginning her master’s program. Her connection to the ASCPA actually began even earlier, when she became a student member during her second year of college after an ASCPA representative spoke to the Accounting Student Association. For Frank, those early opportunities helped introduce her to the professional community beyond the university.

AZ CPA NOVEMBER 2026

Since receiving the scholarship, Frank has checked off several major milestones. She completed both her bachelor’s and master’s, passed the CPA exam, began her full-time career and became a CPA. Frank is now a tax associate with Forvis Mazars and recently transferred from the firm’s Arizona office to Minneapolis. Although Forvis Mazars is a large firm, she has enjoyed the close-knit atmosphere of both offices and the opportunity to build relationships with colleagues across tax, audit and consulting. She has also gained experience working with a variety of return types and client sizes, making her first year in the profession a particularly valuable learning experience. Outside of work, Frank enjoys hiking, walking, painting and traveling. A self-described lifelong learner, she can often be found reading in the evenings. Her connection to the University of Arizona continues as well: she serves as a course facilitator, grading assignments and holding office hours for students. Between her professional growth, continued involvement in education and moving to a new city, Frank’s journey since receiving the scholarship has taken her well beyond the classroom — and she embraces the opportunities to learn along the way. Annie Frank has been an official ASCPA member for three years.

NATHAN SAMUEL MAYNARD, CPA When Nathan Maynard was preparing for graduate school, a former University of Arizona professor introduced him to the AZ CPA Foundation scholarship. At the time, he was working in the university’s accounting department and looking for opportunities to help support his education. The scholarship became his first connection to the ASCPA and, as his career progressed, the ASCPA showed him the value of staying connected to the local accounting community. His coworkers also encouraged him to become a member, and because his employer covers his annual dues, Maynard says membership was an easy choice. Since receiving the scholarship and graduating in 2018, Maynard’s professional and personal life have changed considerably. He moved to Phoenix, earned his CPA license, and joined Deloitte Tax’s Tempe office, where he is now a Senior Manager in the Multistate Tax Services practice. His work encompasses state and local income tax matters for clients across a wide range of industries, including investment management, semiconductors, airlines, real estate and professional sports. While his clients are spread throughout the country, he especially enjoys working with clients in the Valley and being involved in the local business community. Outside of work, Maynard enjoys golf and spending time at the gym, although both hobbies have taken a temporary back seat as he and his wife adjust to life with their new son, who was born earlier this summer.

NOVEMBER 2026 AZ CPA

Looking back on his own career path, Maynard encourages aspiring accountants to pursue the CPA license even if they don’t plan to remain in public accounting. He believes the designation retains significant value throughout a career and can open doors to new opportunities. Nathan Maynard has been an official ASCPA member for six years.

PAIGE G. WINSLOW, CPA Paige Winslow (previously Denton) first encountered the ASCPA as a senior accounting major at the University of Arizona. Faculty members in the Eller College of Management shared information about the ASCPA and the AZ CPA Foundation scholarship opportunities with students, prompting her to apply. She was fortunate to receive the scholarship, which went on to help support her Master of Accounting degree. The scholarship also became her entry point into ASCPA membership and the broader Arizona CPA community. The scholarship helped Winslow pursue her MACC degree while preparing for the CPA exam. She had previously completed a summer internship with EY in 2021, and after graduating from the UofA’s MACC program in spring 2022, she joined EY as an Audit Staff. She was able to take the CPA exams while completing her master’s degree before beginning her full-time career, a combination she found particularly beneficial. Applying concepts from her coursework to her CPA studies — and vice versa — helped reinforce what she was learning. Today, Winslow is an Audit Senior at EY’s Phoenix office, primarily serving clients in the technology industry. She particularly values the people she works with and the firm’s emphasis on collaboration, quality, professional development and team wellbeing. She is also enjoying the opportunity to see how rapidly evolving AI technology is affecting the audit profession, both through its use by clients and its potential to create efficiencies within audit work. Winslow has also embraced one of Arizona’s favorite pastimes: golf. Over the past couple of years, she has taken up the sport with her husband, describing it as equally challenging

(Winslow far right - as part of the top CPA exam passers)

and fun. As she continues to build her career, she remains grateful for the Arizona CPA community and the talented professionals who have offered guidance along the way. She also welcomes opportunities to connect with other CPAs and students interested in learning more about the profession. Paige Winslow has been an official ASCPA member for five years.

AZ CPA NOVEMBER 2026

NICHOLAS RYAN CARLSON, CPA Nick Carlson learned about the Arizona CPA Foundation scholarship through professors at Northern Arizona University who were passionate about helping students succeed. His professors regularly shared opportunities such as the scholarship and worked to ensure financial barriers would not prevent students from completing their education. Since graduating, Carlson has grown significantly both professionally and personally. He is now a CPA and a manager in the assurance practice at Eide Bailly, where he has worked since graduating from college. He primarily serves nonprofit organizations, a role he finds rewarding because it allows him to support entities making a positive impact on their communities. Through ASCPA membership, Carlson has been able to connect with new CPAs and reconnect with former classmates, coworkers and clients while staying current on industry developments. Those connections, along with the support of mentors and leaders throughout his career, have helped build his confidence and shape his work ethic. Away from the office, Carlson enjoys hiking, spending time with family and friends, and karaoke. Nick Carlson has been an official ASCPA member for two years.

SUPPORTING THE PROFESSION These stories are a reminder that the impact of an Arizona CPA Foundation scholarship extends far beyond the financial support itself. A connection with a professor led to a scholarship. A scholarship led to ASCPA membership. Membership opened the door to professional relationships, resources and opportunities that continue to support these CPAs throughout their careers. By building those connections early, we help students see a future for themselves in the profession — and give them a community to turn to as they grow. The future of the accounting profession starts with the students entering it today. Your support of the Arizona CPA Foundation for Education & Innovation helps provide scholarships and opportunities that can make a lasting difference for aspiring CPAs across Arizona. Help us invest in the next generation of accounting professionals and create more stories like these. Donate today at www.ascpa.com/donate.

--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-isabel-hernandez/

NOVEMBER 2026 AZ CPA

The Biggest Threat to a Fraud Investigation Isn’t Always the Fraudster By Lavan Sarat Pattii, CPA, CIMA, CGMA, LLB, CA (India), CMA (India)

Every accounting fraud is first a behavioural failure before it becomes a financial failure. Every forensic investigation is built upon evidence, and modern forensic technology has significantly enhanced our ability to analyse such evidence with remarkable speed and precision. However, there remains one category of evidence that receives surprisingly little attention despite being present at the beginning of almost every fraud: human evidence. Continued on next page...

NOVEMBER 2026 AZ CPA

Picture this … A finance executive notices that an invoice has been approved twice. The documentation appears complete. The approvals are in place. The payment falls within the delegated authority. Nothing, at first glance, appears unusual. Yet something does not feel right. She considers discussing it with her manager but hesitates. Six months earlier, another colleague questioned an unusual transaction and was quietly removed from a critical project. Although no formal action was ever documented, everyone in the department understood the message. She closes the file, the payment proceeds. No forensic accountant is appointed. No regulator becomes involved. No whistleblower complaint is filed. No investigation commences. Most organisations would conclude that nothing happened, as forensic professionals, we should reach a very different conclusion. Not because evidence was destroyed, but because the first and most important evidence was never allowed to exist.

Looking Beyond Traditional Evidence For many years, forensic accounting has focused on discovering evidence after wrongdoing has occurred. We analyse accounting records, reconstruct fund flows, recover deleted electronic data, examine digital devices, interview witnesses and prepare reports capable of withstanding judicial scrutiny. These are fundamental responsibilities of every forensic professional. Yet experience continually reminds us that the success of an investigation is rarely determined by the sophistication of investigative techniques alone. More often, it is determined much earlier, when an ordinary employee decides whether integrity is safer than silence. For this reason, I believe the greatest threat to a fraud investigation is not always the fraudster. It is the environment that convinces honest people not to speak.

AZ CPA NOVEMBER 2026

TRUTH

COURAGE

JUDGMENT

CONCERN

OBSERVATION

HUMAN EVIDENCE PYRAMID The Human Evidence Theory Human evidence is neither documentary nor electronic. It exists within people. It consists of observations, professional judgments, ethical instincts, memories, concerns and contextual understanding possessed by individuals closest to business activities. It can be developed through five distinct stages in what I like to call the human evidence pyramid. 1. Observation: An employee notices something unusual. At this point, there is no allegation, only professional curiosity. 2. Concern: The observation begins to conflict with the individual’s understanding of ethical business conduct. Questions emerge. Why was this approval bypassed? Why does this vendor appear repeatedly? Why has this transaction been structured differently? 3. Judgment: The individual weighs professional responsibility against personal consequences. This stage is rarely discussed, yet it is perhaps the most critical. The employee is no longer evaluating the transaction. Instead, they are evaluating the organisation. 4. Courage: If organisational culture inspires confidence, the individual decides to report the concern. If

the organisation has demonstrated intolerance towards dissent, silence prevails. 5. Truth: Only after these earlier stages succeed does the investigator receive meaningful evidence to initiate a formal forensic engagement. So, long before an unexplained payment appears in a forensic report, someone has questioned its commercial rationale. Before an internal control weakness becomes an audit observation, someone has recognised unusual behaviour. Before regulators initiate enforcement proceedings, an employee has often asked themselves a simple but profoundly important question: Why does this not seem right? That moment represents the earliest form of evidence available to any organisation. Unfortunately, it is also the easiest evidence to lose. Unlike financial records, human evidence cannot be restored from backup servers. It cannot be recovered through forensic imaging. It cannot be recreated using artificial intelligence. Once fear replaces trust, human evidence begins disappearing—not because facts cease to exist, but because individuals conclude that remaining silent is safer than telling the truth.

This, in my view, represents one of the most underestimated risks in modern forensic investigations.

Professional Standards Reflect the Same Philosophy It is noteworthy that globally recognised professional frameworks arrive at remarkably similar conclusions. The AICPA Statement on Standards for Forensic Services requires integrity, objectivity, due professional care, professional competence, sufficient relevant evidence and independent professional judgement throughout forensic engagements. Similarly, the ICAI Forensic Accounting and Investigation Standards emphasize independence, integrity, confidentiality, due professional care, separation of facts from opinions and the Primacy of Truth as foundational principles governing forensic assignments. The COSO Internal Control— Integrated Framework provides a further connection. COSO identifies the control environment as the foundation of an effective system. Environments are shaped by an organisation’s commitment to integrity, ethical values, board oversight, management’s tone at the top, appropriate structures and lines of authority, competence and accountability. Although COSO does not use the term human evidence, its principles reinforce the same underlying idea: when leadership creates an environment in which employees can raise concerns without fear, information reaches those responsible for governance. When retaliation suppresses that communication, both the control environment and the organisation’s ability to identify misconduct are weakened. Although developed for different professional and governance purposes, these frameworks recognise an important reality, truth cannot emerge where evidence is compromised and evidence cannot emerge where people are afraid to speak. Consequently, preserving human evidence is consistent not

only with the ethical foundations of modern forensic accounting but also with the conditions necessary for a sound control environment.

How Retaliation and Silence Destroys Human Evidence Many organisations mistakenly interpret the absence of complaints as evidence of an ethical culture. Experience suggests precisely the opposite. The most damaging frauds rarely flourish because perpetrators possess extraordinary intelligence. They flourish because organisational culture gradually teaches employees that difficult questions carry personal consequences. Fear rarely arrives through formal policy. Instead, it develops quietly. Every employee who experiences retaliation influences dozens of colleagues who observe the consequences. Without issuing a single policy, the organisation communicates that integrity carries personal risk.

An employee who raised concerns is excluded from strategic meetings, another unexpectedly receives adverse performance feedback, someone else is transferred without explanation. Each event appears insignificant in isolation. Collectively, however, they communicate a powerful organisational message: Protect your career before you protect the organisation. From that moment onwards, silence becomes rational behaviour. Eventually, employees stop reporting, managers stop asking difficult questions, witnesses stop volunteering information, the organisation loses not only a whistleblower but also the opportunity to discover misconduct while corrective action remains possible. For investigators, this has profound implications because by the time investigators are appointed, valuable Human Evidence has already disappeared. Continued on next page...

NOVEMBER 2026 AZ CPA

What History Continues to Teach Us Few corporate failures illustrate this reality more clearly than Enron. Long before its collapse, Sherron Watkins had already raised internal concerns about accounting practices. History demonstrates that the organisation possessed an opportunity to confront the underlying issues while corrective action remained possible. Instead, the concerns were not effectively acted upon, and the subsequent events became one of the defining corporate failures of modern times. The enduring lesson is not simply that accounting fraud occurred; fraud has existed throughout history. The more important lesson is that organisations frequently receive early opportunities to prevent catastrophic failures. Those opportunities arrive through people. When organisations fail to preserve human evidence, they also fail to preserve the future integrity of their investigations.

The Investigation Iceberg Traditional thinking views investigations primarily through their visible outputs: document reviews, interviews, digital analysis, expert reports and courtroom testimony. These activities certainly represent the visible face of forensic accounting. However, they constitute only the tip of what I describe as the Investigation Iceberg. Beneath every successful investigation lies an invisible foundation comprising ethical leadership, organisational culture, psychological safety, governance maturity and institutional trust. This perspective fundamentally changes how organisations should approach fraud prevention. Investments in forensic technology undoubtedly improve investigative capability. However, investments in organisational trust preserve the evidence upon which every investigation ultimately depends. Technology detects anomalies. People explain intention. Accounting

AZ CPA NOVEMBER 2026

THE INVESTIGATION ICEBERG HOW HUMAN EVIDENCE BECOMES INVESTIGABLE EVIDENCE

FORMAL FORENSIC INVESTIGATION BEGINS FINANCIAL EVIDENCE EMERGES VISIBLE INVESTIGATION ORGANISATIONAL FOUNDATION

HUMAN EVIDENCE IS PRESERVED EMPLOYEES SPEAK PSYCHOLOGICAL SAFETY ORGANISATIONAL CULTURE ETHICAL LEADERSHIP Leadership creates the conditions in which concerns can safely become evidence.

systems record transactions. People preserve truth.

Stakeholder

Common Focus

A Call to Boards, Audit Committees and Investigators

EvidencePreservation Focus

Boards

Whether fraud controls are adequate

Whether employees genuinely believe they can challenge senior management without fear

Audit Committees

Whistleblower statistics and reported concerns

How many concerns may never have been reported and why

Investigators

Accounting, documentary Whether organisational and digital evidence culture discouraged evidence from emerging in the first place

Leadership

Ethical culture as a governance objective

Preserving human evidence requires key stakeholders to look beyond conventional fraud indicators and consider whether the organisation enables concerns to emerge.

Conclusion & Reflection If you were leading an organisation today, what would concern you more: the fraud you discovered or the fraud that no one felt safe enough to report? As forensic professionals, we are trained to discover facts after misconduct has occurred. Yet the future of forensic accounting may depend equally upon preserving the conditions that allow those facts to emerge before misconduct becomes systemic. Financial evidence will always remain indispensable, digital evidence will continue evolving. Artificial intelligence will transform investigative methodologies, yet none of these developments can replace the courage of an individual who chooses integrity over silence. Perhaps the future of forensic accounting lies not only in building better investigative technologies but also in building organisations where truth is never treated as an act of disloyalty. Every accounting fraud begins as a behavioural failure before it becomes a financial failure. Every fraud leaves financial evidence, but only ethical organisations preserve human evidence and perhaps that is the first evidence every forensic investigator should learn to protect. l Lavan Sarat Pattii, CPA, CIMA, CGMA, is a law graduate, a licensed charted accountant and cost accountant in India, and a forensic investigator. His work focuses on financial misconduct, fraud risk, evidence, governance and ethical decision-making helping organizations understand both what financial records reveal, and the behavioural and control conditions that allow misconduct to arise and remain undetected. Connect on LinkedIn: https://www.linkedin.com/ in/lavan-sarat-p-36aaa8125

Recognising ethical culture as an evidencepreservation strategy

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)

NOVEMBER 2026 AZ CPA

SB 1181: Alternative Pathways to CPA Licensure There’s more than one way to become a CPA. As the profession changes, Arizona is opening new doors for those pursuing the CPA designation. Sen. Mesnard introduced the bill to create alternative pathways to CPA licensure and make related statutory and definitional changes. Explore the pathways below that will go into effect December 31, 2026.

Introduction of the Bill January 2026

Passed Legislature - March 31, 2026

Effective Date – December 31, 2026

(A) Baccalaureate degree + at least two years of experience

Path A Path B Path C

Signed by Govenor – April 7, 2026

(B) Baccalaureate degree + 30 additional credit hours + at least one year of experience (C) Postbaccalaureate degree + at least one year of experience

Strengthening the Pipeline Arizona joins more than 40 other jurisdictions that, since 2025, have made statute and/or changes to rule to offer additional pathways to licensure.

For questions on alternative pathways to licensure, email Emily Webb at ewebb@ascpa.com.

Certifications Beyond the CPA CPAs can sharpen their skillset in many different fields. AREA OF PRACTICE

ABBR. FULL NAME

ISSUING BODY

Business Valuation ABV Accredited in Business Valuation AICPA Business Valuation ASA Accredited Senior Appraiser American Society of Appraisers Business Valuation CBA Certified Business Appraiser National Association of Certified Valuators and Analysts (NACVA) Business Valuation CVA Certified Valuation Analyst National Association of Certified Valuators and Analysts (NACVA) Business Valuation CDBV Certification in Distressed Business Valuation Association of Insolvency and Restructuring Advisors (AIRA) Business Valuation CIRA Certified Insolvency and Restructuring Advisor Association of Insolvency and Restructuring Advisors (AIRA) Compliance, AML & Ethics CAMS Certified Anti-Money Laundering Specialist Association of Certified Anti-Money Laundering Specialists (ACAMS) Compliance, AML & Ethics CCEP Certified Compliance & Ethics Professional Society of Corporate Compliance and Ethics / Compliance Certification Board (SCCE/CCB) Compliance, AML & Ethics CFCS Certified Financial Crime Specialist Association of Certified Financial Crime Specialists (ACFCS) Compliance, AML & Ethics CRCM Certified Regulatory Compliance Manager American Bankers Association (ABA) Employee Benefits & Human Resources CEBS Certified Employee Benefit Specialist International Foundation of Employee Benefit Plans Estate, Trust & Philanthropic Planning AEP Accredited Estate Planner National Association of Estate Planners & Councils (NAEPC) Estate, Trust & Philanthropic Planning CAP Chartered Advisor in Philanthropy The American College of Financial Services Estate, Trust & Philanthropic Planning CDFA Certified Divorce Financial Analyst Institute for Divorce Financial Analysts (IDFA) Financial Planning & Wealth Management CFP Certified Financial Planner CFP Board Financial Planning & Wealth Management ChFC Chartered Financial Consultant The American College of Financial Services Financial Planning & Wealth Management CLU Chartered Life Underwriter The American College of Financial Services Financial Planning & Wealth Management CTFA Certified Trust and Financial Advisor American Bankers Association (ABA) Financial Planning & Wealth Management PFS Personal Financial Specialist AICPA Financial Planning & Wealth Management RICP Retirement Income Certified Professional The American College of Financial Services Fraud & Forensic Accounting CFE Certified Fraud Examiner Association of Certified Fraud Examiners (ACFE) Fraud & Forensic Accounting CFF Certified in Financial Forensics AICPA Fraud & Forensic Accounting MAFF Master Analyst in Financial Forensics National Association of Certified Valuators and Analysts (NACVA) Governance, Risk, and Compliance CGRC Certified in Governance, Risk and Compliance ISC2 (formerly CAP) Governance, Risk, and Compliance GRCA GRC Auditor OCEG Governance, Risk, and Compliance GRCP GRC Professional OCEG Government & Nonprofit CGAP Certified Government Auditing Professional Institute of Internal Auditors (IIA) Government & Nonprofit CGFM Certified Government Financial Manager Association of Government Accountants (AGA) Government & Nonprofit CPFO Certified Public Finance Officer Government Finance Officers Association (GFOA) Internal Audit & Risk Assurance CIA Certified Internal Auditor Institute of Internal Auditors (IIA) Internal Audit & Risk Assurance CRMA Certification in Risk Management Assurance Institute of Internal Auditors (IIA) Internal Audit & Risk Assurance CICA Certified Internal Controls Auditor The Institute for Internal Controls (TheIIC) Investment & Risk Management CAIA Chartered Alternative Investment Analyst CAIA Association Investment & Risk Management CFA Chartered Financial Analyst CFA Institute Investment & Risk Management FRM Financial Risk Manager Global Association of Risk Professionals (GARP) Investment & Risk Management PRM Professional Risk Manager Professional Risk Managers’ International Association (PRMIA) IT & Cyber Risk Governance CISSP Certified Information Systems Security Professional ISC2 IT, Cybersecurity & Data CDPSE Certified Data Privacy Solutions Engineer ISACA IT, Cybersecurity & Data CGEIT Certified in the Governance of Enterprise IT ISACA IT, Cybersecurity & Data CISA Certified Information Systems Auditor ISACA IT, Cybersecurity & Data CISM Certified Information Security Manager ISACA IT, Cybersecurity & Data CITP Certified Information Technology Professional AICPA IT, Cybersecurity & Data CRISC Certified in Risk and Information Systems Control ISACA Management Accounting & Corporate Finance CGMA Chartered Global Management Accountant AICPA and CIMA Management Accounting & Corporate Finance CMA Certified Management Accountant Institute of Management Accountants (IMA) Mergers, Acquisitions & Exit Planning CEPA Certified Exit Planning Advisor Exit Planning Institute (EPI) Mergers, Acquisitions & Exit Planning CM&AA Certified Merger & Acquisition Advisor Alliance of Merger & Acquisition Advisors (AM&AA) Payroll CPP Certified Payroll Professional PayrollOrg Payroll FPC Fundamental Payroll Certification PayrollOrg Privacy & Data Protection CIPM Certified Information Privacy Manager International Association of Privacy Professionals (IAPP) Privacy & Data Protection CIPP/US Certified Information Privacy Professional/United States International Association of Privacy Professionals (IAPP) Process Improvement & Project Management CSSGB Certified Six Sigma Green Belt American Society for Quality (ASQ) Process Improvement & Project Management PMP Project Management Professional Project Management Institute (PMI) Retirement Plan Services CPFA Certified Plan Fiduciary Advisor National Association of Plan Advisors (NAPA) Retirement Plan Services QKA Qualified 401(k) Administrator American Society of Pension Professionals & Actuaries (ASPPA) Retirement Plan Services QPA Qualified Plan Administrator American Society of Pension Professionals & Actuaries (ASPPA) Taxation ATA Accredited Tax Advisor Accreditation Council for Accountancy and Taxation (ACAT) Taxation EA Enrolled Agent Internal Revenue Service (IRS) Third-Party & Vendor Risk CTPRA Certified Third-Party Risk Assessor Shared Assessments Third-Party & Vendor Risk CTPRP Certified Third-Party Risk Professional Shared Assessments Treasury & Corporate Finance Operations CTP Certified Treasury Professional Association for Financial Professionals (AFP) Financial Planning & Wealth Management CFT-1 Certified Financial Therapist Financial Therapy Association Corporate Restructuring CTP Certified Turnaround Professional Turnaround Management Association (TMA) This list was a collaborative effort of the Editorial Committee. Thank you to Andrea Beth Levy, Alli Byrne, Ashlea Perron, Jennifer Greening, Mike Nyman and Ted Bartlett for pulling this together.

NOVEMBER 2026 AZ CPA

YOU are surrounded by results… Success FOLLOWS!

When

~$2 Billion

in Practice Sales

Greatest Number of

Most Recognized

Buyers

Brand

Most

Successful

Transition Advisors

Thinking about Selling? Scan for a Complimentary Valuation

Scan Here

Delivering Results - One Practice At a time Sherif Boctor, CA CPA 888-783-7822 X5 Hannah Boctor Ateam@APS.net • www.APS.net

Opportunity Zones: How Census Tract Changes Affect Eligibility and Planning By Matthew Dunscombe, Keith Wieser, and Carey Heyman

For many Opportunity Zone (OZ) investors and Qualified Opportunity Fund (QOF) managers, the next few years won’t just be about tax benefits — they’ll be about timing, documentation, and defensible decisions. There’s now initial transition guidance addressing how OZ 1.0 investments, projects, and compliance requirements interact with the permanent OZ framework beginning in 2027. Although the U.S. Department of Treasury and the IRS still intend to issue proposed regulations, the guidance establishes important rules for post-2026 investments, property acquisitions, working capital plans, and continued compliance in previously designated zones. This is a moment where clarity matters — not just on what the rules say, but on how they apply to your specific project, fund structure, or investment timeline. Learn why understanding the interaction between OZ 1.0 and OZ 2.0 designations is essential for OZ investment planning, QOF operations, and project execution. Continued on next page...

NOVEMBER 2026 AZ CPA

Background: Opportunity Zones and Changing Census Tracts OZ designations were originally established in 2018 based on then‑existing census tract boundaries. Although the 2020 Census introduced renumbering and boundary updates, the IRS confirmed OZ eligibility continues to follow the original 2018 tract lines. Updated census maps alone don’t change a tract’s OZ status. Separately, the One Big Beautiful Bill Act, enacted in 2025, established a permanent Opportunity Zone framework effective beginning January 1, 2027. New QOZ designation periods generally will run for 10 years, with the first new designation period running from January 1, 2027, through December 31, 2036.

Planning Through the OZ Transition As the program evolves, an overlap period is approaching from January 1, 2027, through December 31, 2028. The IRS transition guidance confirms previously designated OZ 1.0 tracts generally remain designated through December 31, 2028, while the first OZ 2.0 designation period begins January 1, 2027. Puerto Rico tracts deemed designated under the original statute expire one year earlier, on December 31, 2027. The overlap doesn’t mean all post-2026 investment or property acquisition in an OZ 1.0 tract will continue to qualify. Property acquired after December 31, 2026 generally must be located in an OZ 2.0 tract unless it qualifies under the transition rules for certain pre-2027 working capital plans or ordinary-course replacement and modernization property. The transitional guidance resolves several significant questions about legacy tracts, including: • Expiration dates of OZ 1.0 designations • Treatment of property acquired after 2026

AZ CPA NOVEMBER 2026

• Continued application of certain QOF and QOZB compliance rules after a designation expires Nevertheless, fund sponsors and project operators must carefully document how each post-2026 acquisition qualifies, particularly where a project is located in an OZ 1.0 tract that’s not redesignated under OZ 2.0.

OZ Transition Frequently Asked Questions If you’re actively managing or considering an OZ investment, consider: • Is the project located in an OZ 1.0 tract, an anticipated OZ 2.0 tract, or both? • Will the QOZB acquire tangible property after December 31, 2026? • If post-2026 property will be acquired in an OZ 1.0-only tract, does the project satisfy the transition rule for a written working capital plan? • Was the written plan adopted by December 31, 2026? • Has the QOZB received at least 10% of the total estimated working capital assets identified in the plan by December 31, 2026? • Has the QOZB expended at least 5% of those estimated working capital assets by December 31, 2026, including qualifying amounts subject to a binding agreement entered into before January 1, 2027? • Are future property acquisitions substantially consistent with the written plan? • Are later QOF equity contributions tied to cash needed to complete the project contemplated by the qualifying plan? • Does anticipated post-2026 property represent project expansion, which generally doesn’t qualify under the ordinarycourse replacement exception, or replacement and modernization necessary to continue existing operations? • Are fund documents, capital-call provisions, budgets, development

schedules, and investor disclosures consistent with these transition requirements? The transitional guidance requires: • A qualifying plan to be adopted by December 31, 2026 • Relevant acquisitions to be substantially consistent with the plan • At least 10% of the estimated working capital assets to be received by year-end • At least 5% to be expended by year-end • Amounts required to be spent under a binding pre-2027 agreement count toward the expenditure requirement

Current Interpretation: Continuing Validity of OZ 1.0 Tracts For OZ 1.0 tracts, eligibility continues to be determined using the tract numbers and boundaries in effect when those tracts were designated. Guidance confirms 2020 Census changes don’t shrink, expand, or otherwise modify the boundaries of a previously designated QOZ. It also confirms the OZ 1.0 designation period ends December 31, 2028 for previously designated tracts outside Puerto Rico. Puerto Rico tracts deemed designated under the original statute expire December 31, 2027. Updated Census geography doesn’t alter the boundaries of OZ 1.0 tracts. However, the designation period itself isn’t indefinite. OZ 1.0 designations generally expire at the close of December 31, 2028, with the applicable Puerto Rico designations expiring at the close of December 31, 2027.

Interaction Between OZ 1.0 and OZ 2.0 Beginning in 2027, OZ 2.0 will create a new designation cycle rather than automatically extending the OZ 1.0 map. Some OZ 1.0 tracts may also be designated under OZ 2.0, but prior designation doesn’t guarantee

redesignation. Investors, QOFs, and QOZBs should separately verify the tract’s status under each designation cycle. This is especially important for tangible property acquired after December 31, 2026 because property in an OZ 1.0-only tract generally won’t qualify as QOZ business property unless a transition exception applies. Transitional guidance provides two principal pathways for certain property acquired after December 31, 2026 in a previously designated OZ 1.0 tract that is not redesignated under OZ 2.0: Property acquired under a qualifying written working capital plan • The plan must be adopted by December 31, 2026 • The acquisitions must be substantially consistent with the plan • The QOZB must receive at least 10% of the plan’s total estimated

working capital assets by December 31, 2026 • The QOZB must expend at least 5% of the total estimated working capital assets by that date • Certain amounts required to be expended under a binding agreement entered into before January 1, 2027 are treated as expended Ordinary-Course Replacements and Modernization Property necessary to replace or modernize existing tangible business property may qualify if the other QOZ business property requirements are met. The exception doesn’t cover property acquired to expand the business or transition into a new trade or business. These rules are illustrated through examples involving a warehouse expansion, apartmentunit replacements, restaurant modernization, and a multiyear mixed-use development plan. New

Qualified Opportunity Zone guidance addresses post-2026 property acquisitions, written working capital plans, gain recognition, and ongoing compliance. l For more information on Opportunity Zone advising in Arizona, contact Allisyn Byrne at 602-604-3636. The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting, investment, or tax advice or opinion provided by CliftonLarsonAllen LLP (CLA) to the reader. For more information, visit CLAconnect.com. CLA exists to create opportunities for our clients, our people, and our communities through our industry-focused wealth advisory, digital, audit, tax, consulting, and outsourcing services. CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. See CLAglobal. com/disclaimer. Investment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC-registered investment advisor.

Tired? Over-worked?

Ready for a Change?

PRACTICE SALES Buy / Sell / Merge

Cash Buyers Waiting! Rich Joliet, CPA Member ASCPA

SE LL YOUR PR ACTI CE I N 90 DAYS FOR CASH

480-525-8983 • www.cpasales.com

Expert Guidance. Strategic Liquidity Solutions. From partner transitions and acquisitions to growth investments and tax-season planning, CPA ﬁrms face decisions that require timely action. At Western Alliance Bank, we understand the opportunities and priorities unique to accounting ﬁrms and deliver expert guidance so you can act when opportunity arises. Connect with an expert banker at westernalliancebank.com/cpa

Solve today. Succeed tomorrow.

Western Alliance Bank, Member FDIC.

The ASCPA Happenings: A Recap Behind the Scenes at St. Mary’s Food Bank

ASCPA Student Outreach in Full Swing for the Fall Semester The ASCPA recently connected with students at several campus events, sharing information about accounting careers, CPA pathways, scholarships and student resources. At the University of Arizona Meet the Firms, more than 250 students attended, giving ASCPA staff a chance to meet accounting majors, answer questions about the profession and share scholarship information. Matthew V. Frey, CPA, of Strata CPAs PC, volunteered at the ASCPA booth, sharing career advice and insights from his journey from law enforcement to becoming a CPA. The ASCPA also participated in CPA & Beyond: Your Accounting Pathway Through Maricopa, hosted by South Mountain, GateWay and Rio Salado Community Colleges. The event drew nearly 50 students who explored accounting careers and learned about Arizona’s evolving CPA pathways. Gavin Lawrence Mooney, CPA, of Aprio Advisory Group, LLC, joined as a guest speaker and shared his journey from college to CPA licensure and public accounting. Additionally, the ASCPA attended Paradise Valley Community College’s Fall 2026 Meet the Firms, where students connected with accounting professionals, learned about ASCPA resources, and expanded their professional networks. Stay tuned as the ASCPA continues to support and engage accounting students across Arizona.

ASCPA members gave back to the community on October 2. During a special behind-thescenes event at St. Mary’s, members toured the food bank and participated in a foodpacking session. Afterward, members enjoyed lunch and an hour of CPE with St. Mary’s Senior Vice President of Finance, Tina Lyons, presenting on Arizona’s charitable tax credits. Thank you to Tina and St. Mary’s Food Bank for hosting us, and to those who participated in this special event.

From networking to free CPE to federal tax updates – don’t miss out on ASCPA in person and virtual opportunities to connect and learn.

18 Years of Dedication Monica Petersen has retired from the Arizona State Board of Accountancy (ASBA) officially this past September after 18 years of service. We are deeply grateful for the collaborative relationship she maintained between ASBA and the ASCPA. Her dedication to the CPA profession has been inspiring and we wish her well in the next chapter of her life.

NOVEMBER 2026 AZ CPA

PRSRT STD U.S. Postage PAID Tucson, Arizona Permit No. 271 410 N. 44th St. Ste 205 Phoenix, AZ 85008

Don Farmer Don

Federal Tax Federal Tax Update Update with Sean O’Connell

8 CPE Credits | IRS and CFP Credits Available DECEMBER 1

DECEMBER 1 0

8 a.m. - 4 p.m.

Webcast

In Person | Venue8600

Sponsors Sponsors Paychex Jewish Tuition Organization