Disclosures: July/August 2019

THE OFFICIAL MAGAZINE OF THE VIRGINIA SOCIETY OF CPAs

JULY/AUGUST 2019

HONORING A CPA

VSCPA.COM/DISCLOSURES

pioneer

Dr. Ruth Coles Harris

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SAS 134 | ASC 606 | Virginia tax developments

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CONTENTS

Features 16

22 26

Columns

Honoring a CPA pioneer

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Young Professionals 7 steps to work-life nirvana

Dr. Ruth Coles Harris is the inaugural recipient of a new VSCPA award.

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Virginia Tax Significant tax developments

Auditors, take note: Major changes afoot

Departments

The future of revenue recognition is here

FIND US...

CONNECT connect.vscpa.com TWITTER @VSCPANews LINKEDIN tinyurl.com/ LinkedInVSCPA

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From the CEO

6

Line Items

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Advocacy

26

VSCPA News

36

VSCPA Educational Foundation

37

Classifieds

38

Spotlight

FACEBOOK facebook.com/VSCPA INSTAGRAM instagram.com/VSCPA SNAPCHAT @VSCPA

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FROM THE CEO

4309 Cox Road Glen Allen, VA 23060 (800) 733-8272 vscpa.com

disclosures vscpa.com/disclosures disclosures@vscpa.com JULY/AUGUST 2019 Volume 32, No. 4 Managing Editor Jill Edmonds disclosures@vscpa.com Contributing Editor Chip Knighton cknighton@vscpa.com Editorial Task Force Olaf Barthelmai, CPA Cheri David, CPA Mike DellaRipa, CPA Melisa Galasso, CPA Genevieve Hancock, CPA Karen Helderman, CPA Alesia Lewis, CPA Gabriele Lingenfelter, CPA Harold Martin Jr., CPA David Peters, CPA Mark Plostock, CPA Barbara Sukramani, CPA Disclosures is published six times a year by the Virginia Society of Certified Public Accountants (VSCPA). The magazine’s mission is to communicate information of value to VSCPA members, including professional issues and VSCPA initiatives. The materials and information in Disclosures are offered as material only and not as practice, financial, accounting, legal or other professional advice. Statements of fact and opinion are made by the authors alone and do not imply an opinion on the part of VSCPA officers, members or editorial staff. Publication of an advertisement in Disclosures does not constitute a VSCPA endorsement of the product or service. Copyright © 2019 Virginia Society of CPAs.

VSCPA Preferred Providers

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DISCLOSURES

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Helping small businesses succeed This July, we’re formally celebrating small businesses at the VSCPA — emphasis on “formally.” Not only have Virginia CPAs have been supporting small businesses since the CPA credential was introduced, but a great many Virginia CPAs run small businesses all by themselves as sole practitioners.

Our small firms and (especially) our sole proprietors are some of the members who make the greatest use of the resources we provide.

We know it’s not easy for small firms to remain competitive in an environment based on technological advantages that most small firms just can’t sink resources into. To help, the VSCPA offers a formal opportunity for small firms and sole proprietors to network, pool knowledge and share ideas and best practices.

The Society has plenty of resources for small firms and businesses. Resource centers, particularly Business/Practice Management and Marketing and Promoting the CPA Profession, contain events, news and resources on topics like health care, human resources and succession planning — all of which apply to small businesses. The latter features resources to help CPAs market their practices using traditional and social channels.

Another way the VSCPA helps small firms and sole practitioners punch above their weight, so to speak, is through our insurance resources. Brian Marks, our partner at Employee Benefits of Virginia, has worked with us for years to develop insurance plans and is a resource for our members both in and out of public accounting. CAMICO provides a similar resource for professional liability insurance. Both allow small businesses to take advantage of resources of scale.

JULY/AUGUST 2019

We’re always working to secure new partnerships to help our members thrive.

Lately, that’s come in the form of our Center for Innovation, which features technology firms like cloud hosting provider Cetrom and artificial intelligence firm MindBridge. And our partnership with the American Institute of CPAs (AICPA) has long provided resources aimed at helping small firms compete. The AICPA’s On-Point PCR offers affordable technology for preparation, compilation and review services, and the AICPA’s Private Company Practice Section for firms offers similar resources for small firms.

We’re proud to support small businesses in Virginia, both in helping CPAs offer them the best possible financial services and through resources for our own members who run small businesses themselves.

You’re both a part of, and a vital resource to, the Virginia business community. n

Stephanie Peters, CAE, has served as VSCPA president and CEO since 2007. speters@vscpa.com

@StephPeters

connect.vscpa.com/StephaniePeters

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LINE ITEMS

TICKER 7

New CPE Audit Service tool is live

Virginia’s ranking on a survey of most innovative states. Massachusetts took No. 1, with Washington, D.C., and Maryland coming in third and fourth, respectively.

17 PERCENT

Launched in May by the Virginia Board of Accountancy (VBOA), in conjunction with the National Association of State Boards of Accountancy (NASBA), the next iteration of this online tool allows Virginia CPAs to not only track CPE but also review ongoing compliance with VBOA CPE requirements and submit CPE records and documentation for VBOA CPE audits. The tracker will continue to serve as the only way CPAs selected for CPE audits will be allowed to submit records and documentation to show CPE compliance.

This is an entirely new system, so each licensee will need to create a new account. NASBA and the VBOA emailed out a link to register for the CPE Audit Service on May 6. If you need a new password, email cpeauditservice@nasba.org. You should receive a response within 48 hours. A few frequently asked questions: I did not receive an email from the VBOA with a link to set up a new account. What do I do?

Check your email address with the VBOA to make sure it is correct. Contact NASBA and request a new link by emailing cpeauditservice@nasba.org.

Will my old CPE records transfer?

Yes, your old records previously entered into the the old tracker system will transfer over. You are encouraged to set up your new account and verify that all the records have transferred correctly.

The tracker says I am deficient with the Ethics requirement, but I know I took the course. What do I do?

If you see any deficiencies in the requirements summary, scroll down and find the name of the course that is not showing up correctly. Open up the course details and ensure that the question asking if the course was provided by an approved provider is marked yes and save those changes. This will then update the status in the tracker to compliant.

My current VSCPA courses are not in the tracker. What do I do?

When this issue went to print, VSCPA courses taken March 4, 2019, and after were not yet reflected in users’ CPE credits for the current reporting period.

NASBA is actively working with the VSCPA to restore the processing of CPE attendance from the VSCPA into the CPE Audit Service.

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The increase in complaints of Internet crime to the U.S. Federal Bureau of Investigation between 2017 and 2018, resulting in $2.7 billion in losses.

$52.5 MILLION The amount included by the Virginia General Assembly in the current budget for funding to the state’s public colleges and universities to help mitigate tuition increases.

10,200 The number of Virginia hosts on Airbnb in 2018, who earned a total $104 million in supplemental income.

4 The number of Virginians on Forbes magazine’s 400 wealthiest Americans list.

821 The number of enforcement actions by the U.S. Securities & Exchange Commission in FY 2018, garnering $3.945 billion in penalties — 67 more actions than the previous year.

LINE ITEMS

Seeking CPAs for school visits The VSCPA is seeking members to visit high schools for its CPAs in the Classroom program. This initiative supports the VSCPA2025 strategy, “Influence students to become CPAs.” Meeting real-life CPAs introduces students to the profession and allows them to get a look at the opportunities available to them in the accounting industry. With the school year starting back up in just a couple of months, we’re looking to get volunteer speakers on the calendar to help further our goal of protecting the future of the profession. Questions? Email VSCPA Student and Member Engagement Specialist Lauren Simonetti at lsimonetti@vscpa.com.

Visit connect.vscpa.com/Volunteer to sign up.

VBOA COMPLETES TRANSITION TO UNIFORM LICENSE EXPIRATION DATE All Virginia CPA licensees are on the same renewal cycle.

Last year, the Virginia Board of Accountancy (VBOA) began transitioning to a uniform license expiration date of June 30. As of now, all individual and firm licenses expire that day each year, with renewal available at least 90 days before expiration.

Renewal costs $60 for an individual license and $75 for a firm license. Non-renewed licenses will automatically go into Expired status July 1 of each year. In order to make an expired license active again, it must be reinstated through the reinstatement application process, which includes CPE verification and a non-refundable reinstatement fee of $350 for individual licenses and $500 for firm licenses. It is the responsibility of the licensee to reinstate an expired license. Licensees whose licenses are in Expired status may not use the CPA title.

EXCELLENT EXCEL

Watch window Do you have

Excel files with cells that contain control or running totals or formulas to ensure everything is in balance? Do you find yourself constantly searching your files for these cells to ensure they continue to have the expected amounts as other cells change? If you answered yes to any of these questions, you may want to add these cells to your file’s Watch Window to keep a close eye on them. The Watch Window hovers over your workbook or on a different monitor and displays the content of any of the cells you add to it.

The Watch Window continually updates to display the current value of the cells on the watch list. To start using the Watch Window, click on the Watch Window icon under the Formula menu tab. With the Watch Window open, click on “Add Watch…” followed by selecting the cell you want to watch.

Repeat the “Add Watch…” process for each additional cell you want to watch. For each cell added, the Watch Window will show the name of the file, sheet and, if named, the cell. Additionally, the Watch Window will display the cell’s location (e.g. A1), value and formula.

Finally, the Watch Window and the cells it references are automatically saved with the Excel file, which allows you or others using the workbook to quickly keep an eye on those important cells.

George D. Strudgeon, CPA, CGFM, is an audit director at the Virginia Auditor of Public Accounts in Richmond. Email him if you have Excel topics you want him to cover. george.strudgeon@gmail.com connect.vscpa.com/ GeorgeStrudgeon

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ADVOCACY

GRASSROOTS ADVOCACY: The next steps After the 2019 Virginia General Assembly session, the VSCPA seeks to keep its grassroots advocacy efforts going.

Grassroots advocacy has always been a major focus for the VSCPA. After all, we’re an organization that deals with legislation that doesn’t tend to draw many eyeballs. That means we need to put in a diligent, targeted effort to educate legislators on our main issues.

The 2019 Virginia General Assembly session was a departure in nearly every way. We had just one main issue — tax conformity, which dealt with high-profile federal tax reform legislation and drew a commensurate amount of attention to our own efforts.

As such, our education efforts with legislators and the public weren’t as much about making sure they had information, but that it was the correct information. In other words, even with unusually strong public interest in our legislation, grassroots advocacy was still vital.

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It was a fortuitous time, then, for us to launch our VoterVoice online grassroots advocacy system.

Conformity was our first campaign in the system, and it drew a massive amount of interest compared to anything we pushed with our previous online advocacy system. In all, 386 VSCPA members used the system to send 1,199 messages to 130 legislators. The end result? Passage of conformity legislation and tax season starting at a date that, while not ideal, could have been a whole lot worse.

The task now is to keep that momentum going.

Grassroots advocacy is a year-round project for the VSCPA, as shown by the conformity campaign. The key to success was the relationships we had built with legislators and decision-makers. How can we engage and broaden that into a year-round effort to supplement our visits and outreach to legislators during the General Assembly session?

ADVOCACY

Currently, that’s a two-part process. Here’s how we hope to keep the ball rolling on our 2019 success.

RE-ESTABLISH OUR KEY PERSON NETWORK

Lobbying in Washington

Some of you probably recognize that name, but the new version isn’t exactly the same. The new Key Person Network (KPN) will be a network of members we can mobilize to take action on the profession’s behalf. This will be a multi-year process, but the goal is to utilize these members for opportunities throughout the year, not just when the General Assembly is in session.

ENHANCE OUR LOCAL PRESENCE WITH LEGISLATORS We plan on developing a suite of options to allow members to get involved at the local level, speaking both as VSCPA members and as constituents. These include: > Contact legislators through VoterVoice (on social media or on the phone). > Meet with legislators in their district. > Attend VSCPA events with legislators present. > Serve as a local VSCPA advocacy champion and rally local colleagues and peers.

This will be a matter of incremental progress, but hopefully a natural progression. To the VSCPA, our members are our partners who are invested in the future of the CPA profession and willing to work in their communities. But it’s just as instructive to think about what members represent to legislators: local business constituents and subject matter experts on a variety of policy issues.

To the lay person, the CPA profession can be an abstract, opaque concept to comprehend. CPAs deal with complicated issues and, yes, a lot of numbers. Getting our members involved at the local level with legislators can help mitigate that abstraction and create a new, local connection.

What does that look like from the VSCPA’s end? In many ways, that remains to be seen. But we’d like to find more opportunities to engage with our members on advocacy issues. Ideally, that would include a discussion with a legislator. But it could also mean an issues update or a presentation from a VSCPA staffer.

Regardless, we’d love to leverage local connections to legislators and key officials to protect the interests of our members and all the Commonwealth’s CPAs. n

Members and staff visited lawmakers on Capitol Hill

in Washington as part of the American Institute of CPAs’ (AICPA) Spring Meeting of Council and Annual Members’ Meeting on May 21. At the top of the profession’s list of issues are modernizing the U.S. Internal Revenue Service’s (IRS) taxpayer services, changing the trigger that allows the IRS to grant deadline extensions when natural disasters occur, the growing importance of taxation of the digital economy and a Congressional resolution relating to the fiscal state of the nation. VSCPA members in attendance, left to right above, were: VSCPA Political Action Committee Board of Trustees Chair Roy Emmons, CPA, of Bruce, Renner & Co. in Winchester Former VSCPA Board of Directors Chair Richard Groover, CPA, of Wall, Einhorn & Chernitzer in Norfolk VSCPA Board of Directors Chair-Elect Henry Davis, III, CPA, of Virginia Commonwealth University in Richmond VSCPA PAC Board of Trustees member Hal Young, CPA, of Young Accountancy Group in Fairfax Joining them were VSCPA Chief Operating Officer Maureen Dingus, CAE (not pictured), Public Affairs Director David Bass and Vice President, Advocacy Emily Walker, CAE.

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YOUNG PROS

7 STEPS to work-life nirvana Finding the balance you seek between work and the rest of your life is within your reach. Use these seven tips to guide you.

There is nothing worse than checking your email on

your phone late at night and seeing an urgent message from a client or your supervisor about something that needs to be addressed right away. In today’s world, where everyone is always connected, managing work and life is a constant struggle. While technology has infinitely improved the business world, it has also brought with it new struggles and issues. Per a recent study by LinkedIn Learning in April 2019, 70 percent of professionals feel their No. 1 source of stress at work is a lack of work-life balance. Like everything in life, maintaining balance is key. Having said that, here are my seven tips for creating a better work-life balance.

JJ Edmunds, CPA, CIA, CISA

PREPARE A TO-DO LIST AND PRIORITIZE IT!

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Time is the one thing that you can never have too much of. To make sure I use my time as appropriately as possible, I make tons of to-do lists. First thing Monday morning, I sit down and write out everything that I want and need to accomplish for the week.

From this list, I begin to prioritize what needs to get accomplished, and on what day that needs to happen.

One of the added perks of the to-do list is that I also really enjoy the accomplishment I feel whenever I cross something off the list! Sometimes the little joys of life can help push you through the day.

SET BOUNDARIES AND EXPECTATIONS. Make it clear to your co-workers what is important to you. If attending events at your children’s school is something that is important, make sure you set these

YOUNG PROS

expectations with your co-workers. Now, this does not mean you have free rein to slack on your work responsibilities, but it does mean you try to be flexible about how and when tasks get accomplished. It is also important to remember to communicate.

I used to think by letting people know how much I had going on it was considered complaining. However, it is the exact opposite.

Unless I communicate my schedule and workload, people will not know how much I am doing and are unlikely to understand when I don’t have the capability of adding things to my plate. Don’t wait for them to ask; by keeping colleagues up to date on what you have going on, everyone is better able to help manage your worklife balance.

BE PRESENT OR BE ABSENT, BUT NOT BOTH. When you are working, try to be engaged and focused on what you are doing. This allows you to be not only as effective as possible, but as efficient as possible too. On the flip side, when you are not working, try disconnecting. For me, this means when I am not at work I try to stay off of my phone and my email.

Sometimes that even means putting my phone on do not disturb.

I also always find if I don’t disengage from work, that I find myself constantly thinking about it. And there is nothing worse than not being at work, but still thinking about it. Unfortunately, the thought hours don’t count as billable hours!

MAKE TIME TO RELAX. KNOW YOUR LIMITS. A few early mornings a week, I like to play pick-up basketball. On days where I make playing a priority, I always feel more prepared to take on the day than when I do not play in the morning! Even if I can just get 30 to 45 minutes, I still feel a little bit of physical activity makes a huge difference. Another thing I like to do to relax and recharge my batteries is to take 15 to 20 minutes to watch TV while I am eating lunch. I am currently re-watching The Office (for the hundredth time), and I feel like on days where I make it a priority, it really helps break up my day. Nothing gets me more energized for the afternoon like one of Jim’s pranks on Dwight!

People always make time for what they want to make time for. It is really important to find what helps you relax and try to make it happen.

BE FLEXIBLE. Similar to the model many larger companies are moving to, PBMares is a big proponent of a flexible work week. Depending on the employee, this can take many forms. I am a big morning guy, so I like to get into the office really early and get a jumpstart on my day. I am also a big supporter of working remotely. For me, the commute from my living room to my office upstairs always makes the day better. I also feel like I am more productive on days when my only co-worker is my chocolate lab, Cooper! I feel It is important the we begin to break free from the mentality that “I have to be in my seat in my cube from 9–5 Monday through Friday.”

Everyone has their limits about how much work they can accomplish in any one day or within a week. After a certain point, you become less efficient and effective, and your time may be better spent re-charging your batteries than continuing to power through. I know it is always easier said than done, but don’t be afraid to say no to tasks either. If you already have a lot on your plate, sometimes it is better to excel in those items than rush through everything just to get more accomplished.

EMBRACE WORK-LIFE INTEGRATION INSTEAD OF WORK-LIFE CONFLICT! I know I have spent the whole article talking about how to manage work and life. Try thinking about the two of them working together, not in an either/or relationship. I know as CPAs, we are always all about the numbers. Try not to think about managing work and life in quantity of hours, but in the quality of those hours. Work hard to make your time matter, both in work and in life. n

JJ Edmunds, CPA, CIA, CISA, is an audit supervisor with PBMares, LLP in Richmond, serving primarily financial institution clients. He sits on the VSCPA Young Professionals Advisory Council (YPAC).

WEdmunds@pbmares.com connect.vscpa.com/JJEdmunds

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VIRGINIA TAX

Virginia’s most significant tax developments In 2019, Virginia addresses conformity, cost of performance method of apportionment and sales tax nexus.

AROUND VIRGINIA

Monument Terrace, Lynchburg

As we approach the middle of 2019, it is important to reflect on recent

legislative, administrative, and judicial state tax developments in Virginia. This article will look at some of the most significant developments in the Virginia and discuss their prospective impacts.

RESPONSE TO TAX CUTS AND JOBS ACT OF 2017 (TCJA) On Feb. 15, 2019, Virginia Gov. Ralph Northam signed S.B. 1372 and H.B. 2529, updating the state’s conformity to the U.S. Internal Revenue Code (IRC) provisions as of Dec. 31, 2018. The effect and significance of this legislation is as follows: Ilya Lipin, JD, LLM, MBA

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Elil Shunmugavel Arasu, JD, LLM

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> Generally updates conformity retroactively for tax years beginning on or after Jan. 1, 2018.

VIRGINIA TAX

> Expands existing subtraction for Subpart F income to comprise any amount included in income under Sec. 951A, global intangible low-taxed income (GILTI) for corporate taxpayers. This subtraction is allowed only if GILTI was “included in and not otherwise subtracted from the federal taxable income.” To prevent double dipping, “taxpayers may report a subtraction equal to the net inclusion of GILTI after taking into account the offset of any deduction under IRC § 250 or any other section of the Internal Revenue Code.” No similar deduction is provided to individual taxpayers. > Conforms with the federal business interest limitation under Sec. 163(j). Additionally, for tax years beginning on or after Jan. 1, 2018, the bills provide for an individual or corporate income tax deduction equal to 20 percent of the amount of business interest that is disallowed as a deduction pursuant to the business interest limitation. > Expands Sec. 179 small business expensing. > Expands the universe of taxpayers who can use the cash method of accounting. > Imposes an 80 percent of taxable income limitation on the net operating loss deduction, generally repealing the ability to carry back losses, and providing the ability to indefinitely carry forward losses. > Repeals the Sec. 199 domestic production activities deduction.

The bills do not update the state’s nonconformity from the following IRC sections: > Sec. 168(k-m), 1400L, 1400N: Bonus depreciation allowed for certain assets > Sec. 172(b)(1)(H): Five-year carryback of certain net operating losses (NOLs) generated in taxable years 2008 and 2009 > Sec. 163(e)(5)(F): Tax exclusions related to income from cancellation of debt > Sec. 108(i): Tax deductions related to the application of the applicable high yield debt obligation rules Additional information about Virginia’s reaction to the Tax Cuts and Jobs Act (TCJA) and conformity may be found in recently issued Tax Bulletin 19-1 and Tax Bulletin 17-11.

VIRGINIA’S COST OF PERFORMANCE ACTUALLY MEANS COST OF PERFORMANCE In Corp. Exec. Bd. v. Virginia Dept. of Taxn., Va. S. Ct., Dkt. No. 171627, (02/07/2019), the Virginia Supreme Court held that the Virginia Department of Taxation’s use of the Commonwealth’s statutory apportionment formula and cost of performance sourcing methodology of service receipts did not violate the “dormant” Commerce Clause and the Due Process Clause of the U.S. Constitution, and denied the taxpayer’s request to use the alternative apportionment for sourcing its sales.

Headquartered in Virginia, the taxpayer provided advisory, subscription-based research and executive education services to organizations in 50+ countries. Over 95 percent of the taxpayer’s sales occurred outside Virginia, and less than 5 percent of the taxpayer’s gross revenue came from Virginia. However, based on Virginia’s cost of performance methodology of sourcing service receipts, nearly 100 percent of the taxpayer’s gross receipts were apportioned to Virginia. Such apportionment occurred because the service was developed in the state by Virginia employees, and the product was stored on the servers also located in Virginia.

Having most of its property and workforce in the state further increased the taxpayer’s Virginia apportionment formula. Since the taxpayer filed returns in jurisdictions with market-based sourcing methodology, the taxpayer paid tax on a multistate basis on an apportioned amount of income that exceeded 120 percent of its nationwide income. Nevertheless, the court concluded that the taxpayer “did not suffer from an unconstitutional apportionment of its income” and nothing in the jurisprudence interpreting the dormant Commerce Clause or the Due Process Clause requires one of two taxing states to “recede simply because both have lawful tax regimes reaching the same income.”

The court also upheld the denial of the taxpayer’s request to use the alternative apportionment. The taxpayer argued that the assessments were “inequitable” and offered to recalculate its tax liability by sourcing its sales using the market-based methodology, i.e., customer’s billing address, instead of the cost of performance.

Virginia regulation 23 VAC § 10-120-280(B)(4)(b) provides that the statutory method is “inequitable” when “(1) it results in double taxation of the income, or a class of income, of the taxpayer; and (2) the inequity is attributable to Virginia, rather than to the fact that some other state has a unique method of allocation and apportionment.”

The taxpayer satisfied the first prong of the test because varying apportionment methods used by the states subjected the taxpayer’s income to double taxation. However, the court held the taxpayer failed to meet the second prong because u

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VIRGINIA TAX

inequitable apportionment causing the double taxation was not attributable to Virginia, which used the cost of performance formula for nearly 60 years, but was attributed to other states that recently adopted market-based sourcing methodology. The court found that the record presented by the taxpayer did not establish whether the other states’ market-based apportionment methods were unique.

RESPONSE TO WAYFAIR On June 21, 2018, the U.S. Supreme Court in South Dakota v.

Wayfair, 138 S. Ct. 2080 (2018), overturned its rulings in National Bellas Hess, Inc. v. Department of Revenue of Ill., 386 U.S. 753 (1967), and Quill Corp. v. North Dakota, 504 U.S. 298 (1992) and held that physical presence is no longer a prerequisite for a state to require businesses to collect its sales tax. Since the Wayfair decision, more than 35 states have abandoned the physical presence standard in favor of economic nexus.

On March 26, 2019, Gov. Northam signed into law H.B. 1722 and S.B. 1083, which provide that effective July 1, 2019, remote sellers are subject to collection and remittance requirements if they meet either of the following criteria: > Receives more than $100,000 in gross revenue, or other minimum amount as may be required by federal law, from retail sales in the Commonwealth in the previous or current calendar year, or > The seller engaged in 200 or more separate retail transactions in the state in the previous or current calendar year.

1. Satisfies economic nexus requirements applicable to remote sellers; 2. Transmits or communicates an offer or acceptance between a purchaser and a marketplace seller; owns or operates the infrastructure, whether electronic or physical, or technology that brings purchasers and marketplace sellers together; or provides a virtual currency that purchasers are allowed or required to use to purchase products from the marketplace seller; 3. Engages in any of the following activities regarding a marketplace seller’s products: payment processing; fulfillment or storage; listing products for sale; setting prices; branding sales as those of the marketplace facilitator; advertising or promotion; or providing customer service or accepting or assisting with returns or exchanges.

On May 17, 2019, the Virginia Department of Taxation issued guidelines for the new sales and use tax laws. (See Guidelines for Remote Sellers and Marketplace Facilitators, Virginia Dept. of Taxation, 05/17/2019).

TAKEAWAY In the last six months, Virginia had significant state developments with respect to conformity and non-conformity to the TCJA, nexus provisions, and sourcing of receipts. Taxpayers and practitioners should review and understand the applicability of these important recent developments in Virginia to ensure a successful 2019 and beyond. n

In determining the gross revenues and transaction amounts, sales made by commonly controlled persons, member(s) of the same controlled group of corporations, as defined in IRC Sec. 1563(a) are aggregated.

The bills also impose sales tax collection requirements on marketplace facilitators, which are defined as “a person that contracts with a marketplace seller to facilitate, for consideration and regardless of whether such consideration is deducted as fees from transactions, the sale of such marketplace seller’s products through a physical or electronic marketplace operated by such person.”

The marketplace facilitator will be deemed to have nexus with Virginia if they meet the following requirements:

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Ilya A. Lipin, JD, LLM, MBA, is a managing director of state and local tax at BDO USA, LLP in Philadelphia. ilipin@bdo.com (215) 241-1463 Elil Shunmugavel Arasu, JD, LLM, is a managing director of state and local tax at BDO USA, LLP in McLean. earasu@bdo.com (703) 336-1652

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DIVERSITY

HONORING A CPA

pioneer

Dr. Ruth Coles Harris is the first recipient of the VSCPA’s new Ruth Coles Harris Advancing Diversity & Inclusion Award.

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DIVERSITY

Very few VSCPA members have the longevity in the

profession of Dr. Ruth Coles Harris. None can claim to have witnessed the same kind of history.

Harris is the inaugural recipient of the VSCPA’s new Ruth Coles Harris Advancing Diversity & Inclusion Award, and you couldn’t dream up a more deserving candidate if you tried. Harris, 90, spent her formative years under the yoke of Jim Crow, then stood up to ensure her students had the opportunities she didn’t.

Chip Knighton

The actions that cemented Harris’s place in Virginia CPA history took place in November 1962, when she became the first African-American woman to pass the CPA Exam in Virginia. At the time, she was in the position she held her entire career — accounting professor at Virginia Union University (VUU), a small, historically black university in Richmond. Fewer than 100 African-Americans held CPA licenses in the United States, and just one was licensed in the Commonwealth: the late Curtis Duke, a classmate of Harris’s during her undergraduate years at Virginia State College (VSC, now Virginia State University) in Petersburg and again at New York University (NYU).

Despite Duke’s success, the odds were heavily stacked against African-Americans becoming CPAs in Virginia. When Harris sat for the Exam in 1962, the testing location, Virginia Beach, did not have any hotels that allowed African-Americans. Furthermore, no accounting firms in Virginia were hiring AfricanAmericans at the time, seemingly preventing aspiring CPAs from fulfilling the experience requirement to receive a license.

“That impacted me the rest of my time at Virginia Union,” said one of those students, Wendy Lewis, CPA, who graduated from VUU in 1997 and is now a partner at KPMG in McLean. “Whenever I got discouraged or frustrated, I thought, ‘Dr. Harris could drive, take the Exam, drive back, go back and drive and take it again.’ It’s something that motivates me.

When I talk to other students, I tell the story. It was my motivation as I was buckling down to get my CPA. “If she could do it in the time and era that she was in, being a black woman in a white male-dominated

profession, if she could do this, of course I could do this. When she told that story, I think the switch flipped for a lot of us. We saw her very differently, not as this tough accounting professor, but as this role model of who we wanted to be.”

Harris came agonizingly close in May 1962, passing all but the Accounting Practice section, which was administered over two days. She took the section for the second time six months later and had to stay out of town in Norfolk after the first day of testing. Even the Virginia Board of Accountancy (VBOA) didn’t have any solutions for her.

“Fighting a civil rights battle was not my purpose that day, although I didn’t mind fighting for civil rights. My purpose at that time was to pass that examination,” Harris said. “…But of course, there was no place in Virginia Beach that I could stay, and I was told it never occurred to [the VBOA] that a black person would want to go there and sit for the examination.”

Despite those extra obstacles, Harris passed the final section, leaving only the experience requirement.

That’s where Duke entered the picture. Harris had known him at VSU and NYU, and like her, he was working as an accounting professor. In addition, he had a small accounting practice on the side. Harris asked him to allow her to work free so she could get the necessary experience. Duke told her he thought her teaching experience would suffice and urged her to apply for her license immediately. She did that, and the VBOA invited her for an interview.

“When the interview ended, they said, ‘Well, you can go out and get a cup of coffee and be back in about 30 minutes. Then we'll call you in and let you know what we decided,’” Harris recalled. “Well, I was not a coffee drinker. So I decided I would just sit in the chair outside the door and wait for them to arrive at a decision.

“They called me back in at the end of half an hour and said, ‘Have a seat.’ I was waiting for what they were going to say next. I was handed a legal pad and told, ‘Write your name on here like you want it to appear on your certificate.’ And I’m thinking, ‘Let me get out of here before they change their mind.’” u

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From left: A young Ruth Coles from her childhood in Charlottesville; Harris during her academic career; Harris speaks at Virginia Union’s 1982 convocation; Harris with a group of Virginia Union accounting students.

At that moment, Harris had won her battle to become a CPA. But that was just one of the obstacles she faced in obtaining her education and becoming a professional.

Growing up in Charlottesville during the Great Depression, she lived in a world completely separate from the city’s white residents. The daughter of a dentist and a public school teacher, she attended separate schools her entire childhood before graduating from Jefferson Colored High School and leaving for what was then Virginia State College for Negroes at the age of 15.

“There were many differences between our school and the all-white schools,” she said. “But on the flip side of that, we had the best teachers anybody could ever have in our public schools. We didn’t have a lot of resources. We were not allowed to use the public library. The books in our library were, for the most part, old books that had been sent from another school.

“In the summertime, my sister and I used to read every novel they had in the library.

They didn’t have that many. So by the time the summer was over, we had read them all. But we had everything that we needed … I had a very happy childhood,

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notwithstanding the fact that I was aware of discrimination.”

She entered VSC with the idea of majoring in chemistry, her favorite high school subject, but realized on registration day that she didn’t want to take any other science courses. Following her older sister’s lead, she decided on business administration and knew she wanted to be an accountant after taking her first courses as a sophomore.

“There was no subject I’d ever taken that I could stay up all night studying and not mind except accounting,” she said. “In those days, you did practice sets manually, and if it was off by one penny, some people would just say ‘I couldn’t find it.’

But I just couldn’t go to bed until I found every error. It had to be perfect.”

VSC offered just two advanced accounting courses, and few students took them because there weren’t accounting job opportunities for African-Americans in Virginia. Harris took both as electives anyway because one of her professors, George Singleton, encouraged her to pursue her dream and be prepared so she would be ready for any opportunities that

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arose. But the only job offer she got upon graduating in 1948 as valedictorian was a bookkeeping job for a meat-packing plant in Ohio. She chose graduate school instead.

“Who wanted to be a bookkeeper? I didn’t want to be that,” she said. “I wanted to be an accountant.”

In going all in on accounting, Ruth had followed in the footsteps of her sister, Bernadine Coles Gines, who would become the first African-American female CPA in New York. Bernadine had fallen in love with New York when attending graduate school at NYU. She was in New York, of course, because she wasn’t allowed to enroll in graduate school at any Virginia university. Ruth followed in her footsteps, as well as those of Singleton, who was one of the first five African-Americans to graduate from NYU. Both sisters took advantage of the Dovell Act, a Virginia law that helped enshrine “separate but equal” education by paying qualified black applicants for tuition and travel expenses to out-of-state universities.

Ruth didn’t share her sister’s love for New

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York and wondered what she was going to do in her home state upon graduation.

As she was nearing her graduation from NYU, she received a telegram from VUU’s president, Dr. John Malcus Ellison, who was going to be in New York and wanted to discuss a faculty position with her. She took the interview despite no previous interest in teaching.

“I had told one of my teachers in undergraduate school that I would starve to death before I taught a day,” she said.

“She didn’t hesitate to remind me of that. But I was teaching about teaching in secondary school, and I was thinking, ‘That’s not what I want to do.’”

But teaching was what she did, and it turned into a lifelong pursuit. Harris joined the VUU faculty in 1949 in the university’s small commerce department.

When the university established the Sydney Lewis School of Business, she served as its first director, overseeing curriculum development and helping grow enrollment to more than 400 students.

Even that doesn’t begin to cover the impact she made on her students. She taught the introductory principles of accounting course and had a reputation as a demanding teacher who got the best from all her students. That included Lewis, who started out in her class u

A DISTINGUISHED

CAREER

Here’s an incomplete list of the impressive honors awards Dr. Ruth Coles Harris has earned in her career: 1963: Delver Woman’s Clubs Annual Award for outstanding achievement in the field of business 1974: Honorary life member of Virginia Phi Beta Lambda for dedicated service 1976–1977: United Negro College Fund fellowship 1982: Virginia Union University meritorious service award, 1982 1986 & 1988: Virginia Union University Student Government Association Teacher of the Year 1989: Virginia Commonwealth Chapter of the National Coalition of 100 Black Women Serwa Award for outstanding achievement in the field of accounting 1990: Sears Roebuck Foundation Teaching Excellence and Campus Leadership Award 1991: VSCPA/AICPA Virginia Outstanding Educator Award 1992: Virginia Council of Higher Education Outstanding Faculty Award

RUTH COLES HARRIS ADVANCING DIVERSITY & INCLUSION AWARD SPONSOR

A big thank you to Keiter CPA for sponsoring the Advancing Diversity & Inclusion Award during the 2019 Virginia CPA Honors & Awards Ceremony.

1992: Richmond Branch of National Association of University Women Belle Ringer of Richmond 1993: Northern Virginia Chapter of National Coalition of 100 Black Women Ebone Images Award 1995–1996: United Negro College Fund Tenneco Excellence in Teaching Award 2015: Library of Virginia Women in Virginia History 2019: VSCPA Ruth Coles Harris Advancing Diversity & Inclusion Award

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WORK IN PROGRESS The VSCPA continues to strive to address diversity and inclusion issues in the accounting profession in Virginia. Here are some of the initiatives we’ve launched, along with the new Ruth Coles Harris Advancing Diversity & Inclusion Award:

Diversity & Inclusion Board Task Force: This task force, part of our Board of Directors, launched in June. They’ll be recommending VSCPA efforts to influence and support advancing diversity and inclusion in the profession.

CEO Action for Diversity and Inclusion: The VSCPA will sign the CEO Action for Diversity and Inclusion pledge. Visit tinyurl.com/CEOdiversitypledge for more info.

VSCPA Values: As part of its official values, the VSCPA approved this value statement in 2018: “Foster a collaborative, inclusive environment that values and reflects a diversity of people, cultures and perspectives.”

VSCPA Minority Scholarship: This scholarship is awarded annually to minority accounting students.

CPA Ready Workshops: One of these events, aimed at preparing students for entry into the profession, will be held at a historically black college or university in 2020.

VSCPA Women’s Leadership Forum: Set for Dec. 11 at the Richmond CPA Center and simulcast online, this event will bring women together to promote female empowerment in the workplace and everyday life.

You Can Afford College Workshops: These 2017 events were launched with a grant from The Accountants’ Coalition and brought CPA financial experts to underserved, majorityminority communities to discuss college financing options.

Learning and education: The VSCPA is presenting ongoing diversity and inclusion topics in its free member webinars, along with other learning events.

Telling stories: The VSCPA has focused on ethnic diversity and women in themed months in recent years as part of its ongoing marketing strategy to represent the diversity of the profession and VSCPA membership.

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mindful of her uncompromising reputation and ended up counting her as a mentor to this day.

“I was so afraid of all the stories that I had heard,” said Lewis, who added that Harris addressed all students by their last names until they graduated to reinforce a sense of professionalism. “I remember being really worried when I found out I was going to have her as a professor, and it ended up being the best thing that could have happened for me.”

Harris took a similar approach to the accounting club at VUU, which she sponsored. She required professional dress at every meeting to help prepare her students for the corporate world. She had a keen sense of just when to push students, like when she encouraged Lewis to apply for an extremely competitive internship at Nestle USA. Lewis thought she had no chance at getting one of the 10 spots, but applied anyway at Harris’s urging. The decision has reverberated throughout her career.

“The auditor at Nestle was from my current firm,” Lewis said.

“That’s how I was exposed to KPMG, from talking to those auditors, and that was one way I got this job here. If Dr. Harris hadn’t pushed me, I don’t know if I would be here.

“Big firms didn’t come to Virginia Union to recruit. We had to mail in our resumes to get those opportunities. She forced us to always push ourselves.”

Harris retired in 1997 and was named a Distinguished Professor Emerita, but an even greater honor was in store. The following year, VUU conferred upon her an honorary degree. Last year, VUU launched the Ruth Coles Harris Leadership Institute, which offers a lecture series on business and community issues and a certificate program for professionals in entrepreneurship, organizational change and leadership, nonprofit and church administration and project management.

Midway through her career, Harris earned her doctorate in education from the College of William & Mary, one of the schools that wouldn’t have even looked at her as an undergraduate. She downplays the significance of that breakthrough, but later in her career, she took an adult class at the University of Virginia (U.Va.), just a few blocks from where she grew up, for more symbolic reasons.

“I just went up there and took a course just because I could.

It wasn’t even a class that was anything related to accounting.

It was just, ‘What do you offer of interest to me at a time that’s convenient for me?’”

Official racial barriers started to crumble after the passage of the

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Civil Rights Act in 1964. Harris’s children were allowed to attend the schools that were closed to her when she was growing up, and she was allowed to eat in restaurants that wouldn’t let her in the door in years past. Changing hearts and minds was a different matter.

It was a bittersweet moment in a life filled with them. Harris gone from separatebut-equal beginnings to accomplishments never before achieved by AfricanAmericans in Virginia, and the people in the Hot Shoppe couldn’t see — or didn’t want to see — past her skin color.

“When some racial barriers were breaking down in public facilities, I knew that I could go to any restaurant I wanted to,” Harris said. “There was a Hot Shoppe cafeteria across from Thalhimer’s on Grace Street. My husband took me, my mother, my aunt and our young son there one Mother’s Day.

So it is with the Ruth Coles Harris Advancing Diversity & Inclusion award.

No one can change what Ruth Coles Harris endured or give back the opportunities she was denied. Many of the CPAs who wouldn’t give her a look were undoubtedly VSCPA members, some of them leaders in the Society. And there were hundreds, thousands, of promising students just like her whose accounting careers never got off the ground because of the color of their skin.

“We were the only blacks there at the time we arrived. Everybody else who came in sat all the way to the other end, and they kind of stared at us like, ‘What are you doing in here?’ Nobody sat anywhere near us. It was like they thought brown would rub off on them.”

but it bends toward justice.” It’s a small gesture from an imperfect profession in the interest of acknowledging past injustices.

Let us — as an organization, a profession and a society — never lose sight of the way Ruth Coles Harris was treated and how she fought to make things better for her students and their contemporaries. And let us continue to push, in our own, small way, toward true equality. n

See other award winners beginning on page 30!

Chip Knighton is communications manager at the VSCPA, as well as contributing editor at Disclosures magazine. cknighton@vscpa.com connect.vscpa.com/ChipKnighton @ChipKnighton

Instead, we hope this award is a data point in Dr. Martin Luther King Jr.’s famous arc of the moral universe, which “is long,

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AUDITING

AUDITORS, take

note:

MAJOR CHANGES AFOOT NEXT YEAR SAS 134 updates the auditor’s report for private companies, including a new section on Key Audit Matters.

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AUDITING

Melisa Galasso, CPA

On May 8,

the American Institute of CPAs (AICPA) issued Statement Auditing Standards (SAS) 134, Auditor Reporting and Amendments, Including Addressing Disclosures in the Audit of Financial Statements. This statement will have a major impact on all audits performed for nonpublic entities.

The standard replaces all extant reporting sections including AU-C 700, Forming an Opinion and Reporting on Financial Statements; AU-C 705, Modifications to the Opinion in the Independent Auditor’s Report; and AU-C 706, Emphasis-of-Matter Paragraphs and Other-Matter Paragraphs in the Independent Auditor’s Report.

with wording and paragraph order. What most CPAs will notice right from the start is the reorganization of paragraphs. In fact, the first section of the report will be the opinion. Currently, the opinion is toward the end of the report as a conclusion. I like to think about the new report as starting with the end in mind. The initial paragraph in the opinion section will mirror the extant initial paragraph that introduces the entity, the financial statements and the financial statement period. The second paragraph in the opinion section will be the extant audit opinion paragraph in which the auditor will express an unmodified opinion on the financial statements.

SAS 134 also creates a new AU-C section, AU-C 701, Communicating Key Audit Matters in the Independent Auditor’s Report. These changes are a result of a massive project the Auditing Standards Board (ASB) has been focused on for quite some time. The project was not done in a vacuum; in fact, it was done primarily with the goal of convergence. Both the International Auditing and Assurance Standards Board (IAASB) and Public Company Accounting Oversight Board (PCAOB) have issued similar standards reorganizing and updating language in their auditor’s reports.

The next section of the report will be the basis of opinion section. Currently, auditors report a basis paragraph when modifying an opinion. Under the new SAS, all audit reports will include a basis section.

The paragraph starts off with a statement asserting the auditor follows U.S. Generally Accepted Audit Standards (GAAS). The sentence is the same as in the extant auditor’s responsibilities paragraph. It is then followed by a statement that sends the reader to the auditor’s responsibilities paragraph. The next sentence explicitly addresses the independence of the auditor and their ethical responsibilities. The current standard only addresses independence of the auditor in the title. The paragraph closes with a statement regarding sufficiency of audit evidence, which is from the extant auditor’s responsibilities paragraph.

The new SAS primarily converges with the IAASB’s report, but the PCAOB has issued a very similar standard. The project is a result of feedback from users of financial statements. The response was that users liked the current pass-fail model, but wanted more information about significant aspects of audit. There was concern that most audit reports used boilerplate language with little transparency about the audit.

AU-C 700: OPINION AND REPORTING AU-C 700, Forming an Opinion and Reporting on Financial Statements, clearly indicates the objective of the auditor is to “[F]orm an opinion on the financial statements based on an evaluation of the audit evidence obtained, including evidence obtained about comparative financial statements or comparative financial information,” and “express clearly the opinion on the financial statements through a written report.” AU-C 700 addresses the most basic of the auditor’s reports.

The changes to the basic audit report primarily deal

The next section of the report addresses management’s responsibilities for the financial statements. Similar to the current standard, the first paragraph addresses management’s responsibility for fair presentation and internal control. The second paragraph is new and addresses management’s responsibilities regarding going concern.

After management’s responsibilities, the report discusses the auditor’s responsibilities. Auditors will quickly note the length of the new section. The first paragraph addresses the objectives of the auditor as stated in AU-C 700. It then provides the user with a definition of reasonable assurance and material misstatement. It also addresses the difference between fraud and error and the difficulty in finding fraud due to the intentionality of the misstatement. The next paragraph is a bulleted list of the procedures that auditors perform as part of the audit. It addresses u

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professional skepticism, risk assessment, internal controls, accounting policy and estimates and going concern. The last paragraph in the auditor’s report section addresses the auditor’s responsibilities regarding communications with those charged with governance.

The report concludes with a signature, city and state of the auditor and date. Many auditors will find that the standard report, depending on formatting, will no longer fit on one page due to the expansion of the auditor’s responsibilities section.

AU-C 701: KEY AUDIT MATTERS AU-C 701, Communicating Key Audit Matters in the Independent Auditor’s Report, is a new AU-C section which introduces the concept of Key Audit Matters (KAM). This section addresses the auditor’s responsibility to communicate KAM when the auditor is engaged to do so. This is a very important concept. The AICPA is not mandating the reporting of KAM. An auditor is only required to report KAM when so engaged. An auditor may be engaged to report KAM at the request of a bank, regulatory body or even a parent company. Once engaged to communicate KAM, the auditor then follows AU-C 701.

KAM are defined as “Those matters that, in the auditor’s professional judgment, were of most significance in the audit of the financial statements of the current period. Key audit matters are selected from matters communicated with those charged with governance.” The PCAOB uses the term “critical audit matters,” which has a slightly different definition but the same intent — to provide audit and entity-specific information in the auditor’s report to address the user’s desire for less boilerplate language.

KAM are only permitted to be reported in an audit of a complete set of generalpurpose financial statements. In fact, an

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auditor is prohibited from communicating KAM when expressing an adverse or disclaimer of opinion (unless required to by law or regulation).

KAM are very judgmental and the guidance for identifying KAM is principle-based. The goal is to identify those items most significant that were communicated to those charged with governance. The determination of what was “most significant” will be based on professional judgment. Items to consider include those that required significant auditor attention — high-risk areas, significant auditor judgment — or that were challenging to obtain audit evidence.

The auditor should also consider those areas that were complex and required significant management judgment as well as significant unusual transactions. KAM is intended to be entity-specific with no boilerplate language. The idea is that KAM is both entity- and audit-specific. KAM relates only to the current year, even when comparative years are shown, and are selected from those items communicated to those charged with governance. KAM are reported in the context of the auditor forming an opinion on the financial statements as a whole, meaning the auditor is not giving an opinion on individual KAM or providing a piecemeal opinion.

Once all potential KAM are identified, the auditor must identify which ones are MOST significant based on the concept of relative significance. This is also judgmental, as it is at the auditor’s discretion to determine the number of KAM and which items are selected.

When reporting KAM, a separate section in the auditor’s report should be labeled “Key Audit Matters.” The auditor then includes an introductory paragraph defining KAM and informing the user that KAM was audited in relation to the audit of the financial statement as a whole. After the introductory paragraph, the auditor

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provides information about each audit matter identified. The order of KAM is also at the discretion of the auditor. Each description of KAM should include a reference to the related disclosures, if any, as well as an explanation as to why the matter was considered to be one of most significance by the auditor and how the matter was addressed in the audit. Auditors could provide a description of procedures performed, evidence obtained and aspects of the audit approach — while being sure not to imply an opinion on a particular KAM. It is possible that no KAM would be reported in an auditor’s report despite being engaged to communicate KAM. For example, a law or regulation prohibits disclosure about a matter or, in extremely rare circumstances, the auditor determined after a cost/benefit analysis that the matter should not be communicated in the auditor’s report because of potential adverse consequences. If no KAM is reported, the auditor would include an indication in the “Key Audit Matters” section that there are no matters to report.

AU-C 705: OPINION MODIFICATIONS AU-C 705, Modifications to the Opinion in the Independent Auditor’s Report, addresses modifications to the auditor’s report including the issuance of qualified, adverse and disclaimer of opinions. The layout of a qualified opinion will be very similar to the standard report. In the opinion paragraph, similar to the current standard, the use of “except for” language is used in the opinion (second) paragraph.

In addition, prior to the standard basis paragraph, a new paragraph explaining the reason for the qualification would be included similar to today’s basis paragraph. In an adverse opinion, similar to today’s standard, the opinion paragraph would state the financial statements “do not present fairly” the financial position

AUDITING

and results of operations. Similar to the qualified opinion, a basis paragraph would be added before the standard basis paragraph explaining the reason for the adverse opinion.

In terms of presentation, when KAM is presented, an EOM paragraph can be presented either directly before or after the KAM section. The order of presentation is up to the auditor.

The disclaimer of opinion presentation is likely the largest change from the standard report. The first paragraph of the opinion section is modified to indicate that the auditor was “engaged to” audit the financial statements as opposed to indicating they did audit the financial statements. In addition, the second paragraph is modified to state that the auditor does NOT express an opinion.

In the basis for disclaimer paragraph, the standard paragraph is removed and only the paragraph explaining the reason for the disclaimer is kept. In addition, the auditor’s responsibility section is significantly scoped back. The auditor responsibility sentence is followed by a statement regarding the basis paragraph and how the auditor was unable to obtain sufficient appropriate evidence. The remainder of the section is then deleted. The section closes with a statement regarding ethics and independence, which would normally appear in the standard basis paragraph.

The disclaimer opinion is therefore clearly shorter and different to more easily identify it is not a standard report.

When an OM paragraph is needed to address a matter related to other reporting responsibilities, the OM paragraph may be included in the section “Report on Other Legal and Regulatory Requirements.”

When the matter is relevant to all the auditor’s responsibilities or to users’ understanding of the auditor’s report, the OM paragraph may be included as a separate section following the sections “Report on the Audit of the Financial Statements” and “Report on Other Legal and Regulatory Requirements.”

AU-C 706: EMPHASIS OF MATTER AU-C 706, Emphasis-of-Matter Paragraphs and Other-Matter Paragraphs in the Independent Auditor’s Report, addresses the interplay of KAM and emphasis-ofmatter (EOM) and other-matter (OM) paragraphs. EOM paragraphs received an updated definition to indicate that the auditor would not be required to modify the opinion in accordance with AU-C 705 as a result of the matter and that the matter was not been determined to be a KAM. OM paragraphs also clarify that if the matter is determined to be KAM, it would not be reported as an OM paragraph.

CONFORMING AMENDMENTS & DISCLOSURES While SAS 134 addresses major changes to the auditor’s report, the standard also includes significant changes related to the ASB’s disclosure project. Many AU-C sections are updated to include new requirements for auditors to consider related to disclosures. Frequently, the term “notes” is replaced with the term “disclosures.” AU-C 240 is updated to address the consideration of disclosures during the fraud brainstorming session.

AU-C 300 is amended to address the auditor’s plan for risk assessment and further audit procedures related to disclosures. In addition, financial statement assertions received a significant update with respect to disclosures.

The engagement letter receives significant updates as a result of the updated auditor report. AU-C 260 is changed to include communicating significant risks to those charged with governance. AU-C 600 is updated to address how to format a financial statement that contains multiple components and the presentation of the group audit.

Going concern is also amended significantly; it is no longer considered an emphasis-of-matter paragraph. As going concern is now standard wording for both the auditor and auditee, if there were substantial doubt about an entity’s ability to continue as a going concern, the auditor would include a required section titled “Substantial Doubt About An Entity’s Ability to Continue as a Going Concern” and would reference the note disclosure and indicate the report was not modified.

If the disclosures were not adequate, the auditor would express an adverse or qualified opinion and then include an explanation in the basis paragraph.

EFFECTIVE DATE As there were significant changes to the report as well as other areas, the effective date for SAS 134 is for audits of financial statements for periods ending on or after Dec. 15, 2020. Early implementation is not permitted. As a side note, SAS 134 is not applicable when the auditor is forming an opinion and reporting on financial statements of employee benefit plans subject to the Employee Retirement Income Security Act of 1974 (ERISA). A separate ERISA specific reporting standard is expected out later this year. n

Melisa Galasso, CPA, is the founder of Galasso Learning Solutions LLC in Charlotte, N.C., where she designs and facilitates courses in advanced technical accounting and auditing topics, including nonprofit and governmental accounting. She is a member of the VSCPA Board of Directors and sits on the Disclosures Editorial Task Force. melisa@galassolearningsolutions.com connect.vscpa.com/MelisaGalasso @GalassoLearning galassolearningsolutions.com

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ACCOUNTING

THE

future OF REVENUE

RECOGNITION IS HERE Now that many public companies have an annual filing with the Financial Accounting Standards Board’s (FASB) ASC 606 closed and ‘in the books,’ it begs the question: Now what?

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ACCOUNTING

If your company is anything like mine, everyone

Genevieve Hancock, CPA

is tired of hearing about ASC 606 implementation, and absolutely no one wants to hear you walk them through the five-step model one more time. Many industries landed back in a similar place to where they started, but there were some that were entirely uprooted. Some went from modified cash basis to full accrual under an entirely new standard (welcome to my world), others dealt with amendments and ASUs that came later in the game and changed the preparation for the standard yet again, while some private companies have yet to adopt.

We may never see another change in our lifetimes that is as impactful and requires as much assessment and change management as the implementation of ASC 606 — Revenue from Contracts with Customers. One thing ASC 606 accomplished was pointing out a major blind spot in many companies’ finance organization cultures — a lack of a lovely blend of a specialized but flexible expertise in technical accounting, contract application of this accounting, project management and change management skills to address the change to everyone involved.

AMENDMENTS Accounting standard updates and letters from FASB’s Emerging Issues Task Force (EITF) have been abundant over the last few years. Nearly every area of the codification was affected by the change to ASC 606 or the later-issued accounting standard updates. Even to this day, seldom thought-of effects caused by 606 permeate real estate sales guidance via anti-speculative clause paragraph amendments, or even expenses with ASC 705 amendments related to variable rebates for vendor contracts. Some of the more beneficial updates came from Transitional Resource Group meetings and the EITF, such as clarification around how to calculate and account for basic allowances for doubtful accounts and the fact that this calculation presentation and accounting was not changing as substantially as originally thought.

Others that affected fewer areas were based on ASC 606, such as determining who is the customer in a service concession arrangement with ASC 853. Most of the amendments did not have a wide scope of

companies unless they were clarifying the original accounting standard update related to ASC 606 — Revenue from Contracts with Customers.

IMPROVEMENTS TO DISCLOSURES AND SEC REPORTING One of the largest changes to revenue recognition is related to the required disclosures to the financial statements. Many new and comparative disclosures — generally on a prospective basis if the modified retrospective transition method was elected — were added to the checklist for the notes to the financial statements. The key to having full disclosures is to explain the delta between the new and old numbers for the disclosure amounts. Disclosing the new calculation was not enough in many circumstances, but rather the marginal difference between the old calculation and the new calculation needed explanation where applicable.

For example, for transition disclosures under ASC 605, the company was calculating a certain portfolio of contracts with net treatment. Under ASC 606, it is no longer allowed to account for these transactions on a net basis, and the difference is material enough to disclose, so the reason and amount of the difference should be thoroughly explained and disclosed in the notes to the financials related to the financial statements. The U.S. Securities & Exchange Commission (SEC) has directed many companies on the disclosure requirements related to the transition, with the intention of the disclosures being the quantitative impact, significance and clear timeline for implementation around the transition.

One of the more complex required disclosures is the disaggregated revenue disclosure as it relates to the revenue streams of the company. The revenue streams should be disaggregated into categories based on the nature, amount and timing of recognition related to the cash flows and as to how they are affected by economic factors. This disclosure is one that many companies are still being asked to refine and is one where comparative financial information is preferred but not required when the modified retrospective method of transition was elected. It is important to note that there is a lot of management judgment u

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ACCOUNTING

We may never see another change in our lifetimes that is as impactful and requires as much assessment and change management as the implementation of ASC 606.

required around this disclosure, as well as that there is (generally interpreted, but not specifically laid out) a minimum number of revenue streams required to be disclosed. Investors and analysts have put a lot of emphasis on the amounts disclosed to be used on a go-forward basis as one of many indicators of the financial health of a company.

Another area of concern around disclosures is related to performance obligation disclosures. This disclosure can be incredibly difficult for companies to adequately complete as of the beginning of the adoption period due to the specific requirements for the disclosure. The more intricate of the requirements is ensuring that the disclosure around the rationale as to why the measure of progress selected for each disclosure is an accurate representation of the pattern of transfer.

Amounts related to assets to fulfill or obtain a new contract should be disclosed and should not to be confused with contracts liabilities, otherwise known as deferred revenue, which is generally the amount of cash received in advance of satisfying a performance obligation.

Contract assets related to costs to obtain and costs to fulfill can be very specific on a company level, but must be able to be tied on the specific contract level.

The full calculation for these can be very different from company to company and the aggregate amount of the costs should be disclosed in any required financials, noting the difference between the last set of financials to the current and the drivers

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for the change (i.e. the net increase or decrease to the asset account).

OTHER CONSIDERATIONS Don’t forget internal controls or financial systems. Not all financial systems are able to immediately adapt from the change from ASC 605 to ASC 606, so part of the planning process must include any additional time spent adapting the financial reporting and production or billing systems to be able to reflect the changes as needed. The internal control framework is another item that should be closely monitored, with an additional level of one-time controls around the adequacy of the transition for any private companies with audits of internal controls around financial reporting. The quantitative aspect of the change is what the investors are relying on, but do not overlook the auditing controls to show that the numbers are being properly processed and reliably presented. Most interpretations of the standard in relation to new internal controls describe that companies should implement new controls to ensure any changes are captured, even if the total change is insignificant or immaterial to the financial statements.

LOOKING FORWARD: PRIVATE COMPANY IMPLEMENTATION After nearly five years working on the implementation, change and maintenance of ASC 606, I can state with full confidence that if you are part of a private company and you are only partially complete on

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assessment or, worse, you haven’t even started on the implementation — you should focus on that and gear up for the change now. Trying to document revenue streams, assess on portfolio and at least a sample contract interpretation approach, change the accounting (on either adequate topside or underlying financial systems changes) and calculate the comparable financial information on either a modified or full retrospective approach is quite the undertaking in both time and expertise.

Maybe it will be perfect, but more than likely, no matter how you prepare, you will end up with some sort of unforeseen fallout. Be it an obstacle around financial systems capabilities, or a change in how you are allocating the amounts, you should be finalizing your assessments and ensuring that the process is tested and measured and that your disclosures are in order.

Public companies benefited greatly from early adopters of ASC 606 through the notes and comments related to the disclosures around ASC 606. Since these companies adopted early, the entire accounting ecosystem was able to feel out and have a basis to look at for learnings on where to improve or focus on calculations.

Talk to the internal and external auditors in your company about control considerations and disclosure requirements to begin to set up an adequate framework for financial statement disclosures. Review the notes to the financial statements of public companies in the industry as a basis for what has been done and improve upon

ACCOUNTING

your own from there. Take the information from publicly issued comment letters or EITF meetings to discuss the learnings from early adopters and now public companies, one year into application of ASC 606. And ensure you have someone who is fully versed on ASC 606, even if that means dedicating a person for this transition.

Proactive anticipation can help ease the stress of implementation at the last minute, rather than being reactive in the final months of potential implementation.

And if the company is really trying to implement best practices, then mock up the notes to the financial statements and the transition disclosures in advance to be reviewed and adjusted as needed.

CONCLUSION When it comes to project management, starting early on large implementations such as this one can make or break how much additional work a company puts in. Hundreds of hours of time and effort are less likely to be overwhelming when you spread them over a year to two years. Having the right people on the team to assess, or further developing the skill sets of existing employees through more technical requests or contract interpretation, can also make or break a project timeline. While we may never see another change as large as the one around ASC 606 and revenue recognition, the only constant is change, and the FASB will

continue to issue relevant updates that will need to be applied across a wide range of companies and industries. n

Genevieve Hancock, CPA, is a technical accountant leading the corporate revenue recognition initiatives for Brown and Brown Insurance in Daytona, Florida. She is a member of the VSCPA’s Disclosures Editorial Task Force and Young Professionals Advisory Council.

T.Genevieve.Hancock@gmail.com connect.vscpa.com/GenevieveHancock linkedin.com/in/GenevieveHancock

49th Annual

Virginia Accounting & Auditing Conference Sept. 26–27, 2019 Falls Church Marriott Fairview Park

Sept. 23–24, 2019 Hotel Roanoke & Conference Center

vscpa.com/Conferences

Nov. 21–22, 2019 Founders Inn & Spa, Virginia Beach

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VSCPA

OUTSTANDING MEMBER:

Vivian J. Paige, CPA

Paige with Board Chair Gary Thomson

Vivian J. Paige, CPA, is a sole proprietor and senior lecturer

in accounting at Old Dominion University (ODU) in Norfolk, but that’s not the main reason why she’s being honored as the VSCPA’s 2019 Outstanding Member. No member made a more important contribution to the profession than she did in helping the VSCPA overcome numerous obstacles to get tax conformity legislation passed.

Paige has been an asset to the VSCPA’s advocacy efforts for years, but the conformity issue was particularly well-suited to her areas of expertise: government and taxation. She’s spent the last several years of her career working to educate different groups of people about both issues, from her tax classes at ODU to her role as an opinion columnist for The Virginian-Pilot in Norfolk.

All that work in sharing information paid off nicely this past winter when the VSCPA needed to put out a massive information campaign to get conformity legislation passed. Members’ and legislators’ levels of information about conformity varied widely, with the implementation of elements of the federal Tax Cuts and Jobs Act (TCJA), the first major tax legislation in more than 30 years, complicating matters further.

Enter Paige, who was the primary author of the VSCPA’s opening conformity salvo, the whitepaper “Virginia Tax Conformity: 2018 and Beyond.” She stayed involved throughout the process, helping the VSCPA craft its conformity messaging and serving as a technical resource for VSCPA staff. (It’s worth pointing out here that none of the staffers who took an active role in the conformity campaign are CPAs, making that expertise even more valuable.)

Paige consulted on member resources, participated in an explanatory podcast and helped lead a conformity session at the VSCPA’s E-Summit conference. All told, it’s hard to imagine the Society getting such a politicized issue through a divided General Assembly in a short session during an election year without her contributions.

“I think [the short session] probably had a bigger impact than people realized,” Paige said. “First of all, because it’s not a budget year, the session is 15 days shorter. It meant there were only 45 days to be able to digest the information. Yes, we had some information in August when the [Chainbridge] report [commissioned by the Virginia Department of Taxation] was released, but the full General Assembly didn’t go into session until January.”

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Paige’s patient approach to informing tax practitioners about the ins and outs of conformity is an extension of the way she handles her classroom at ODU. It’s also reflective of the way she learned about taxation herself. She started out as a music education major at Hampton University, then transferred to ODU and switched her major to accounting.

Not only did the switch not take right away for her, but she burned out quickly after working every summer. So she took a year off from college, working for the U.S. Internal Revenue Service (IRS) to make money and get a look at accounting from a different angle. That decision made all the difference in her career.

“I saw the difference in the way tax was taught at the IRS,” she said. “Before they let me put my hands on a return, I sat in a class from 8–5 from Monday to Friday for six weeks. The way it was taught was a holistic approach to taxation.

“In college, it’s about the stuff that’s easy to memorize and test on.

It’s a lot of exceptions to the exceptions and not a lot of general rules. Another approach is to teach it as how you fill out forms without any information on why you fill out the forms and what these numbers are.”

True to her own experience, Paige says her best students are the ones with no previous tax experience. They’re the most receptive to her philosophy of teaching the “why” of taxation along with the “how.”

Paige also contributes to accounting education by consulting with textbook companies, providing technical guidance, checking solutions to problems and making sure supplementary materials are correct. n

Read full profiles of Vivian and Jim at vscpa.com/2019AwardWinners.

VSCPA

IMPACT AWARD WINNER:

Jim Cole, CPA

The Society passed a quiet milestone the morning of Feb. 7

when Jim Cole, CPA, wrapped up his portion of the first runthrough of the VSCPA’s Virginia-specific Ethics course, marking the end of involvement in the course that dated back to its inception in 2003.

Cole had written portions of the course for the past five years and taught it from the beginning, but even that doesn’t truly reflect his contributions to the VSCPA’s educational efforts. He taught his first course for the Society in 1996 and has taught more than 375 courses, seeing nearly 40,000 students, since then. It’s incredibly appropriate, then, that he’s receiving the VSCPA’s first Impact Award, because it’s hard to imagine a way to have a greater impact on the profession.

By the way, those numbers just reflect the VSCPA courses that Cole has taught. Factor in his work for various firms and other organizations that have had him teach CPE to their employees and the numbers skyrocket.

“I actually kept track for a while of all the different courses, presentations, speeches and talks and all of that that I did,” Cole said. “When it reached 1,200, I gave up counting. Really, when you say it’s over 1,000, that’s pretty good for a career. And that was several years ago.”

That’s all been a labor of love for Cole, whose day job as the CEO of the Masonic Home of Virginia in Henrico County keeps him plenty busy. He’s been there since 2002, and before that, he’d spent nearly the same amount of time (just under 18 years) working for the Virginia Tech Foundation. He started his career at Brown Edwards, then Ernst & Whinney after graduating from Virginia Tech in 1980.

That’s not his only degree, though. He received his master’s in education in 1993 even with the CPE work continuing to serve as a sideline in his career. That’s the dedication he’s brought to making sure the professionals who learn from him get the best possible instruction.

“The time I enjoy most about all of these classes and presentations and things is from about five minutes before it starts until I drive away from the place,” he said. “The few minutes right before, people who have watched me a while see that I literally start to bounce on my feet a little bit.”

Cole with Board Chair Gary Thomson

Cole has also had involvement with the VSCPA through the CPE Steering Committee and speaking gigs at the Society’s Nonprofit Conference. He eventually chaired that committee and also led the Business & Industry Conference Committee until a few years ago. That’s just a sampling of his VSCPA volunteer roles, which also include a stint on the Board of Directors from 2005–2007.

Cole also helped spearhead the VSCPA’s education efforts for nonprofits and has led numerous nonprofit seminars for the Society. That’s an extension of a niche that he’s filled since his earliest days in public accounting, but it scratches an itch that developed well before that.

He’s dialed that back over the past few years, along with the consulting business he ran on the side, in an effort to spend more time with his growing family. He has five grandchildren, the youngest of which was born on the eve of that final Ethics class at the CPA Center.

He cites his most memorable teaching experience as an Ethics class at the Virginia Accounting & Auditing Conference at the Hotel Roanoke that included a video featuring VSCPA President & CEO Stephanie Peters, CAE. That particular course didn’t quite go as planned — the sound went out on the video in question, but Cole decided to press on.

“We’re going through it and we get up to her video,” Cole said.

“And I said, ‘Now, what Stephanie is going to tell you is A, B and C, and she’s also going to say…’ and I forget what it was I said, but as soon as I said it, the sound came on and that is exactly what she was saying. And I got this huge ovation from everybody in the room because I literally had nailed it to almost within the second.

Someone told me afterwards, ‘Obviously you’ve taught this course too long if you’re doing that.’” n

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VSCPA

RECOGNIZING YOUNG PROS:

2019 Top 5 Under 35

JJ EDMUNDS, CPA, 29 Audit & Assurance Supervisor PBMares, Richmond

From left to right: JJ Edmunds, CPA, Beth Seger, CPA, Asif Charania, CPA, Genevieve Hancock, CPA, LaKrisha Watson, CPA

ASIF CHARANIA, CPA, 32 Senior Manager, Valuation and Forensic Services Keiter, Glen Allen

Hometown: Midlothian College: Christopher Newport University (CNU)

Volunteering: VSCPA Young Professionals Advisory Council, VSCPA CPAs in the Classroom program, leadership team for the ChamberRVA Helping Young Professionals Engage (HYPE) program, speaking and advocacy engagements

Hometown: Hanover County College: James Madison University Volunteering: VSCPA Young Professionals Advisory Council, LEAD Task Force, Business Valuation, Fraud & Litigation Services Conference committee, American Institute of CPAs (AICPA) national business valuation committee

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Read full profiles of all award winners at vscpa. com/2019AwardWinners.

VSCPA

GENEVIEVE HANCOCK, CPA, 32 Corporate Revenue Recognition Leader Brown and Brown Insurance, Daytona Beach, Fla.

Hometown: Williamsburg and New Orleans

2019–2020 VSCPA EDUCATIONAL FOUNDATION BOARD OF DIRECTORS

College: College of William & Mary

CHAIR

Volunteering: VSCPA Young Professionals

Heather Koppe Flanagan, CPA, CGFM, CISA, Washington

Advisory Council, Disclosures Editorial Task Force, coordinating bimonthly column for young professionals in Disclosures, regular magazine contributor

CHAIR-ELECT Dianne Guensberg, CPA, McLean

BETH SEGER, CPA, 30

VICE CHAIRS Scott Davis, CPA, McLean

Managing Consultant Berkeley Research Group, Washington, DC

Nick Harrison, CPA, Richmond John Waters, CPA, Norfolk

Hometown: Centreville College: James Madison University Volunteering: Point of contact for her previous firm’s (Veris Consulting) school partnership program, working with elementary schools on extracurricular and beautification efforts; helps high school students with resumes and mock interviews

SECRETARY/TREASURER Beth Bickford, CPA, VSCPA AT-LARGE DIRECTORS Michael Crichton, CPA, Fairfax Jaime Lynn Dernar, CPA, Reston Chris Enright, CPA, Montpelier

LAKRISHA WATSON, CPA, 29

Cheryl Fields, CPA, Mechanicsville Marshall Handy, CPA, Virginia Beach Delord King, Ph.D., CPA, Glen Allen Kevin Matthews, CPA, Reston

Tax Manager Dixon Hughes Goodman, Richmond

Melanie Randall, CPA, Ashland Neena Shukla, CPA, Fairfax

Hometown: Richmond

Randy Spurrier, CPA, Norfolk

College: University of Richmond and Virginia

Elizabeth Workman, CPA, McLean

Commonwealth University

Natalya Yashina, CPA, Fairfax

Volunteering: Junior Achievement of Central

Donna Yenney, CPA, Richmond

Virginia young professionals board, Junior Achievement’s Finance Park volunteer

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VSCPA

2019–2020 Board of Directors

THE VSCPA’S NEWEST VIRGINIA CPA LICENSEES Danielle Burge, CPA, Locust Grove Matthew Faircloth, CPA, Leesburg

Left to right: Gabriele Lingenfelter, Charles Valadez, George Crowell, Christine Williamson, Melinda Coley, Henry Davis, Jason Navon, Jennifer Lehman, Krystal McCants, Anne Hagen, Melisa Galasso, Gary Thomson, Aaron Peters, Stephanie Peters. Not pictured: Hope Cupit and Nammy Lee.

CHAIR Gary Thomson, CPA Thomson Consulting, Richmond CHAIR-ELECT Henry Davis III, CPA, Virginia Commonwealth University, Richmond VICE CHAIRS Melinda Coley, CPA, MBA, Anthem, Inc., Virginia Beach George Forsythe, CPA, WellsColeman, Richmond Anne Hagen, CPA, Masonic Home of Virginia, Henrico Krystal McCants, CPA, CST Group, CPAs Reston VSCPA PRESIDENT & CEO Stephanie Peters, CAE

Hope Cupit, CPA, SERCAP, Roanoke Melisa Galasso, CPA, CGMA, Galasso Learning Solutions, Charlotte, N.C. Nammy Lee, CPA, Ph.D., University of Virginia, Falls Church Jennifer Lehman, CPA, GCMA, Hantzmon Wiebel LLP, Charlottesville Gabriele Lingenfelter, CPA, MBA, Christopher Newport University, Newport News Jason Navon, CPA, Rossen Landscape, Sterling Aaron Peters, CPA, Peters & Associates, Falls Church Charles Valadez, CPA, CGMA, CISA, CIA, TechnoServe, Inc., Washington Christine Williamson, CPA, CohnReznick LLP, Tysons

AT-LARGE DIRECTORS George Crowell, CPA, CITP, Harris, Hardy & Johnstone, PC, Richmond

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Justynne Friend, CPA, Norfolk Brent Jester, CPA, Richmond Madeleine Leon, CPA, Virginia Beach Christine Lindsay, CPA, Charlottesville Leyna Magdon, CPA, Stephens City Andrew Sageser, CPA, Richmond Jessica Sipple, CPA, Charles Town, W.Va. Andrew Venzke, CPA, Leesburg Alexandra Witt, CPA, Harpers Ferry, W.Va. List from April and May. Compiled May 22, 2019.

firm news MERGERS & ACQUISITIONS Brown Edwards has acquired Cherry Bekaert’s Roanoke and Lynchburg practices.

Sareen & Associates in Manassas has acquired Stone & Shah CPAs in Chantilly.

VSCPA

STAFF ANNIVERSARIES

Congrats, members

Brandon Pope, CPA, and Hope Cupit, CPA

NEW HIRES

Pictured clockwise: July 7: Marketing Specialist Amanda Arnold, 4 years July 14: Vice President, Finance & Administration Beth Bickford, CPA, 10 years July 26: Academic Engagement Director Molly Wash, CAE, 15 years Aug. 6: Innovation & Leadership Director Laura Cobb, CAE, 7 years Aug. 12: Technology Manager Zané Mullins, PMP, 6 years

Brandon Pope, CPA, has joined Vaco Richmond as director of business development.

APPOINTMENTS & AWARDS Gov. Ralph Northam named Hope Cupit, CPA, president & CEO of SERCAP in Roanoke, to the Virginia Council on Environmental Justice.

Joe English, CPA, partner at Burdette Smith & Bish in Fairfax, was named to the Freedom Bank of Virginia Board of Directors.

Aug. 13: Member Services Coordinator Rocio Gibbs, 21 years

IN MEMORIAM Bob Glisson, a VSCPA Life member from Doswell. A graduate of High Point College, he served in the U.S. Naval Reserve and worked in corporate finance and for the U.S. Internal Revenue Service (IRS) before joining Waller & Woodhouse.

That firm later merged with Price Waterhouse, where he retired as partner in 1986. He served on numerous VSCPA committees, including a stint as chair of the State and Local Taxation Committee.

Rick Jenkins, CPA, a VSCPA Life member from Harrisonburg.

Randy Simmons, CPA, a VSCPA Life member from Newport News. A U.S. Army veteran, he served in the Korean War and was treasurer of the Peninsula Stadium Authority for 19 years and served on numerous VSCPA committees, including the Federal Taxation Committee, the CPE Steering Committee and the Disclosures Editorial Task Force.

Rick Hefner, CPA, of Roanoke. A U.S. Army veteran, he served in the Vietnam War and worked for the IRS for 30 years.

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FOUNDATION

Congrats to the newest VSCPA Educational Foundation scholarship recipients The VSCPA Educational Foundation has awarded 24 scholarships worth a combined $57,250 to outstanding accounting students at Virginia colleges and universities.Thanks to everyone who donated — you can too at vscpa.com/ donatefoundation. This year’s 2019–2020 recipients are: VSCPA Past President’s/Chair Scholarship ($2,000) Marlena Zaleski of Blacksburg, Virginia Tech VSCPA Graduate Scholarship ($2,000 each) Zachary Beigel of Richmond, University of Virginia Aaron Rosedale of Madison, James Madison University Emily Steele of Fairfax Station, College of William & Mary VSCPA Ph.D. Scholarship ($2,000) Jonathan Truelson of Christiansburg, Virginia Tech VSCPA Minority Scholarship ($1,500–$2,000) Carissa Malone of Blacksburg, Virginia Tech Tamera Williams of Franklin, Christopher Newport University VSCPA Undergraduate Scholarship ($1,500) Samuel Main of Kernersville, N.C., Randolph-Macon College CST Group Scholarship ($3,000) Emily Coppa of Kinnelon, N.J., University of Virginia Dixon Hughes Goodman Scholarship (two awards at $2,500 each) Kathryn Cardenas of Stafford, University of Virginia Lisa Edwards of Aylett, James Madison University H. Burton Bates Jr. Scholarship ($2,250) Willow Pedersen of West Point, Virginia Tech Kearney & Company Scholarship (two awards at $2,500 each) Genevieve Coan of Herndon, Virginia Tech Sarah Grigg of Alexandria, George Mason University Michael E. Mares Scholarship (two awards at $2,250 each) Colleen Connolly of Winchester, Randolph-Macon College April Meadows of Chesapeake, Old Dominion University

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MJW Scholarship (two awards at $2,250 each) Molly Carpenter of Roanoke, Virginia Tech Laura Cooper of Glen Allen, Virginia Commonwealth University Thomas M. Berry Jr. Scholarship (two awards at $3,000 each) Katherine Lee of Richmond, University of Virginia Savannah Lee of Bedford, James Madison University Verus Financial Partners Scholarship ($3,000) Carl Scholl of Clinton, Conn., College of William & Mary Virginia Tech Doctoral Scholarship ($3,000) Note: selection made by Virginia Tech Adam Watanabe du Pon of Blacksburg, Virginia Tech Wall, Einhorn & Chernitzer Scholarship ($3,000) Jennifer Freebus of Virginia Beach, James Madison University Yount, Hyde & Barbour Scholarship ($3,000) Matthew Mitchell of Suffolk, Old Dominion University

DONATE TODAY Support and inspire the next generation of CPAs. Give today to the VSCPA Educational Foundation. Visit vscpa.com/donate foundation.

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37

SPOTLIGHT

VSCPA member Eric Negangard, CPA

Photography by: Mark Gilvey Creative, LLC | mgcre8v.com

Eric Negangard, CPA, Ph.D., CFE, is an assistant accounting

My advice to fellow CPAs is... To grasp the power of innovation, disruption and change. Whether you self-select into a career in audit, tax or advisory, your ability to use technology to solve complex accounting problems is paramount. Technology will play an enormous role in your career and I firmly believe that your ability to learn and adapt to disruptive technology will be the most critical factor in your future success as a CPA.

I am passionate about... Conducting research on and teaching students how to use digital evidence to solve complex accounting problems. In today’s highly digital world, every action and reaction is captured and memorialized in some digital form. Yet most organizations and their people lack an understanding of how to identify, procure and analyze relevant information that could provide the best answers to the many challenges they face.

I never leave home without... Missing my kids and wife.

Kyle, almost three, and Crew, just over four months now, are an absolute riot. My wife, Ashley, is my best friend and an awesome mom.

professor at the University of Virginia’s McIntire School of Commerce, where he teaches courses in Forensic Accounting and Auditing.

He was previously a manager in KPMG’s Forensic Services practice, where he primarily worked on large U.S. Securities and Exchange Commission investigations, violations of the Foreign Corrupt Practices Act and fraud risk management engagements.

People don’t know this, but... I am an avid scuba diver, snowboarder and motorcycle enthusiast! Today’s society moves so fast and we are constantly pulled in so many directions that we too often forget to find time to relax and have fun.

If I weren’t a CPA, I would be... A boat captain. I grew up on the water and I think it would be really cool to help others navigate the world’s waterways. Who wouldn’t enjoy getting paid to drive someone else’s multi-million dollar yacht?

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I wish CPAs knew... How to embrace the ability of digital solutions such as blockchain, robotic process automation and machine learning to solve complex accounting problems. I run the risk of sounding like a broken record here, but success as a CPA is quickly becoming one part accounting and many parts computer science. CPAs absolutely must do a better job embracing technology.

I am a CPA because... It opened the most doors for me as an undergraduate college student, and I knew it would lead to a diverse and exciting set of potential career paths. n

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