Disclosures: September/October 2020

THE OFFICIAL MAGAZINE OF THE VIRGINIA SOCIETY OF CPAs

SEPTEMBER/OCTOBER 2020

VSCPA.COM/DISCLOSURES

7 MERGERS, 5 YEARS HOW one firm DID IT

+

CPA Evolution Remote work Reopening offices

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CONTENTS

Features 20

7 Mergers, 5 Years: How One Firm Did It Take advice from a firm that has been there ... and reap the rewards.

26

A New Horizon For the CPA The CPA is evolving. A new exam model will focus on the CPA of the future.

FIND US...

Columns 12

Remote Working Balancing work and school

14

CPA Licensing Moving across state lines?

16

Reopening How 2 firms responded

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

Departments 4

From the CEO

6

Line Items

10

Tech Talk

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

11 Advocacy 30

VSCPA News

33

Spotlight

34

Classifieds

PODCAST vscpa.com/ LeadingForward

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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

SEPTEMBER/OCTOBER 2020 Volume 33, No. 5 Managing Editor Jill Edmonds disclosures@vscpa.com Editorial Task Force Olaf Barthelmai, CPA Abby Brooks, CPA Cheri David, CPA Melisa Galasso, CPA Genevieve Hancock, CPA Karen Helderman, CPA Harold Martin Jr., CPA David Peters, CPA Mark Plostock, CPA Zach Shoaf, 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 © 2020 Virginia Society of CPAs.

VSCPA Preferred Providers

Evolving to survive As technology in the accounting

world accelerated over the past decade, a question became apparent to CPAs and their professional organizations: How could we ensure the CPA designation — and everything it stands for — is still relevant in this century, and remains so for years to come?

That kicked off the CPA Evolution initiative, spearheaded by the American Institute of CPAs (AICPA) and National Association of State Boards of Accountancy (NASBA).

A feature article on page 26 examines the initiative in depth, but I wanted to provide you with some context.

The AICPA and NASBA did not make this decision in a vacuum. State societies and their leaders, including the VSCPA, were vital contributors to the conversation throughout the process. The VSCPA Board of Directors had a long and spirited discussion about Evolution and what it means for the future of CPA firms and the talent they seek to hire. Ultimately, the Board did decide to support the initiative and issued a resolution on April 29, 2020. As reflected in the resolution, the Board thought the following reasons were necessary for support: • Global trends in technology are dramatically affecting the profession.

Just look at the proliferation of data analytics and the acceleration of technologies like artificial intelligence.

• The skills and competencies necessary for CPAs to succeed in their profession are rapidly changing, and this evolution shows no signs of slowing!

• To address this current business climate and marketplace, the CPA Exam model must change and evolve.

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CPAs are always going to be the trusted business advisors to their clients and companies, and they simply must be tested on the Exam on how to address businesses’ changing needs. This new model does not get rid of the core of the CPA. CPA candidates will still be tested on taxation — despite all the changes happening because of technology, everyone will still need to file taxes! Accounting and auditing are also still part of the core of the new CPA Exam. The article dives more into what will change, but this new Exam is coming soon. If it remains on track, it will roll out in January 2024.

Part of our VSCPA2025 strategic framework is to influence students to become CPAs, and we have no plans of slowing in this area. We will work to educate our student members, talk to educators and carry this message to potential CPAs across the Commonwealth. Your profession deserves the best and brightest, and with this new testing model, they will be even more prepared. n

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

LINE ITEMS

New VSCPA council will address diversity, equity, inclusion To follow up

on our June 5, 2020, Statement on Racial Injustice, the VSCPA has established a new Diversity, Equity & Inclusion Advisory Council. The Council is tasked with advising the VSCPA Board of Directors and staff on programs and policies related to diversity, equity, inclusion and social justice; engaging with leaders, schools and other stakeholders to increase students of color entering the CPA profession; and identifying resources to educate members and their organizations about these issues. The Council is made up of a mix of members and nonmembers: CHAIR Anne Hagen, CPA Masonic Home of Virginia, Richmond

Dylan Hendrickson WellsColeman, Richmond Jennifer Lehman, CPA, CGMA Hantzmon Wiebel LLP, Charlottesville

VICE CHAIR Krystal McCants, CPA YHB CPAs & Consultants, Fairfax

Wendy Lewis, CPA KPMG, McLean

Courtney Arrington, CPA Genworth, Richmond

Darry Newbill, CPA Deloitte & Touche LLP, Richmond

Marijia Bailey, CPA Marcum LLP, Washington, D.C.

Carlos Otal, CPA Grant Thornton, Alexandria

George Crowell, CPA, CITP Harris, Hardy & Johnstone, PC, Richmond

Vivian Paige, CPA, CGMA Christopher Newport University, Newport News

Damon DeSue, CPA PRA Group Inc., Norfolk

Stephanie Peters, CAE VSCPA, Glen Allen

Kelci Dixon North Carolina A&T State University, Greensboro, N.C.

Jim Phillips, CPA KPMG, Richmond

Kimberly Ellison-Taylor, CPA, CGMA, CISA Oracle, Reston Jake Greene, CPA Marcum LLP, Washington, D.C.

Danish Qureshi, CPA RSM US LLP, McLean EX OFFICIO MEMBER Henry Davis III, CPA Virginia Commonwealth Univerity, Richmond

Cassie Hartogs, CPA BDO USA, LLP, McLean The Council will have its first meeting on Sept. 22. More information on the Council’s activities will be posted in the VSCPA’s Diversity, Equity & Inclusion Resource Center at vscpa.com/diversity. Questions or feedback? Email us anytime at diversity@vscpa.com.

Find us on Instagram!

Quick tips, member profiles, links to articles … Find it all in the official VSCPA Instagram account: Instagram.com/VSCPA

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LINE ITEMS

TICKER $13.9 MILLION The number of Americans who will receive interest payments from the U.S. Internal Revenue Service on their 2019 federal tax return refunds.

$18 The average interest amount being paid out to individual taxpayers.

110,000 The approximate number of Virginia small businesses receiving relief funding U.S. Small Business Administration (SBA) due to coronavirus.

16,100 The approximate number of Virginia small businesses identified in a list released by the SBA for receiving $150,00 or more.

$34 MILLION Amount being directed by Virginia to clean energy projects like electrifying the state vehicle fleet and replacing all-diesel cargo equipment at the Port of Virginia.

97 PERCENT The number of CPA financial planners who said they made changes to at least one of their clients’ financial plans as a result of COVID-19, according to an American Institute of CPAs (AICPA) survey.

67 PERCENT The percentage of changes made to investment allocation, followed by spending decisions (59 percent) and tax strategy (43 percent).

‘Virginia Is For Lovers’… and safety In July, the Commonwealth was the first state in the nation to adopt workplace safety standards to help protect Virginia workers from the spread of COVID-19. Among many regulations, the standards mandate appropriate personal protective equipment, sanitation, social distancing and more. “Keeping Virginians safe at work is not only a critical part of stopping the spread of this virus, it’s key to our economic recovery and it’s the right thing to do,” said Gov. Ralph Northam.

CPA firms and other companies who employ VSCPA members all want to know: How are you handling returning to work and workplace safety? How are you protecting your employees? Here are some places you can start: READ: The VSCPA Coronavirus Resource Center at vscpa.com/coronavirus has a special section with resources just for reopening. We’ve included links to Virginia’s standards, the state’s ‘Forward Virginia’ plan to ease public health restrictions, our own Business Reopening Handbook, legal and HR considerations, guides, checklists and more.

WATCH: We have Facebook Live Town Halls you can watch anytime at facebook.com/vscpa covering a variety of reopening topics. The July 22 video with Elizabeth Rafferty, director of government affairs at Williams Mullen, discusses the standards. And the VSCPA YouTube Channel at youtube.com/vscpavideos has a conversation between Jennifer Rose from the Virginia Department of Labor and Industry and VSCPA Public Affairs Director Tim Barry.

CONNECT: Sign up for a virtual roundtable this fall to discuss any issues or challenges you’re having with your peers (vscpa.com/VSCPARoundtables), and you can always ask questions in the VSCPA Connect Online Community (connect.vscpa.com).

READ: If all the changes this year is taking its toll on your mental health and well-being or that of your staff, check out the special section on stress and mental health at vscpa.com/coronavirus for articles, podcast links and more.

Do not neglect yourself as you navigate the new normal!

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VSCPA2025:

Creating a culture of learning In 2018, the VSCPA embarked on a bold plan to move the profession toward a successful, vibrant future, as embodied in our mission to empower our members to thrive. The VSCPA2025 strategic framework lays out four bold strategies centered on our aspiration to be the essential, strategic partner for CPAs, their profession and their communities. So, how are we doing? Here’s a check in on one of our bold strategies: Create a Culture of Learning.

The accounting profession changes rapidly, so it’s essential CPAs are continuously learning, developing and growing their skillsets. We are committed to infusing learning in all our activities to enhance CPAs’ leadership skills and technical competencies — as well as elevate CPAs’ ability to provide the highest value, influence and impact.

Here are a few ways were consistently providing learning opportunities: > It’s no surprise that the COVID-19 pandemic made us quickly pivot to delivering conferences and seminars virtually. All CPE courses and other learning will be delivered online through December (with a 20 percent discount), and registrants aren’t missing a beat. With thousands of courses and seminars and six virtual conferences planned this fall, CPAs can continue getting their CPE and developing their skills wherever they are. Visit vscpa.com/cpe to access the CPE Catalog. We’ve got free CPE too, with WOWbinars, Virtual Interchanges and roundtables scheduled throughout the year (find them at vscpa.com/freecpe). > When you CAN come back to in-person learning, we’re ready for you at the newly renovated VSCPA Learning & Innovation Center. You’ll find three new classrooms with an additional five new spaces for meetings, all fully equipped with in-person technologies and remote access to participate from anywhere. Every classroom and meeting room offers collaborative and/or traditional learning environment setups. The new lobby area has increased square footage and functionality and is now a fully collaborative space for fun activities, meal functions or workspace with seating for up to 60 people. The VSCPA’s headquarters is completely updated for today’s innovative work environment! > While you can learn from an expert speaker or accomplished thought leader, you can also learn from your peers. While working remote, most of your networking and peer-to-peer learning opportunities may be tabled. To keep you connected, we increased the number of virtual roundtables, and you get free CPE credit. Find them at vscpa.com/roundtables. > We’re partnering with several innovative companies to bring you hand-selected programs and exclusive content to take your leadership development and technical skills up a notch. Visit vscpa.com/partner discounts to find classroom trainings from Dale Carnegie, courses from Floricane and John Maxwell and much more. > We understand that learning isn’t just about CPE courses. It’s about everything we provide, including all our communications. This summer we debuted a brand-new Facebook Live Town Hall series, where we interview experts on issues you need to know now, such as workplace responses to the pandemic, programs like the Paycheck Protection Program and more. A new biweekly e-newsletter, The Account, provides breaking news and timely features to keep you in-the-know.

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LINE ITEMS

A new internet domain, just for CPAs If your firm is looking for a new way to increase its presence online, a .cpa domain name could be what you are looking for.

The American Institute of CPAs (AICPA) has opened registration for .cpa, a new, secure domain exclusively available to CPA firms. The AICPA was awarded the domain from the Internet Corporation for Assigned Names and Numbers (ICANN). The new domain can help firms: • Secure data: Protect your firm’s data and clients’ personal information from phishing and other security threats with a harder-to-spoof online identity.

• Enhance client trust: Distinguish your firm as a trusted leader in a competitive field with a CPA-verified domain only available to accounting pros.

• Strengthen your brand: Take advantage of a shorter, more relevant URL that highlights your expertise and makes it easier for prospects to find you online.

Applications for the domain opened Sept. 1. Find everything you need and apply at cpa.com/dotcpa.

The Tools to Take Your Advisory Role to the Next Level Enhance consultations with the right resources to help your clients regain their footing during the COVID-19 pandemic.

• Are they re-opening or re-evaluating how to operate their business?

• Do they need guidance on the PPP loan forgiveness application?

• Are new state regulations leaving them in need of a business continuity plan? payx.me/vscpa-covid-19 877-534-4198

Paychex developed its COVID-19 Help Center to offer support and provides additional tools in the Accountant Knowledge Center (payx.me/akc)

Paychex is proud to be the preferred provider of payroll services for the VSCPA. © 2020 Paychex, Inc. All Rights Reserved. | 7/31/20

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TECH TALK

Are you using multi-factor authentication to protect clients?

Whenever possible,

you must be using multi-factor authentication to prevent identity thieves from accessing your clients’ personal information, according to the U.S. Internal Revenue Service (IRS) and its Security Summit partners.

Beginning next year, all tax software providers will be required to offer multi-factor authentication options on their products that meet higher standards (and many already do). A multi-factor or two-factor authentication offers an extra layer of protection for the username and password used by the tax professional. It often involves a security code sent via text.

“The multi-factor authentication option is an easy, free way to really step up protection of client data,” said IRS Commissioner Chuck Rettig. “All tax software products will make it a feature, and it’s part of a larger effort to protect taxpayers and the tax community.”

Of the numerous data thefts reported to the IRS from tax professional offices this year, most could have been avoided had the practitioner used multi-factor authentication to protect tax software accounts. Practitioners can download to their mobile phones readily available authentication apps offered through Google Play or the Apple Store.

These apps will generate a security code. Codes also may be sent to a practitioner’s email or text but those are not as secure as the authentication apps. Use a search engine for “Authentication apps” to learn more.

In additional to tax software accounts, practitioners should use multi-factor authentication wherever it is offered. For example, cloud storage providers and commercial email products offer multi-factor protections as do social media outlets.

IRS e-Services is an example of an account using multi-factor authentication.

For more help, check out IRS Publication 4557, Safeguarding Taxpayer Data, and Publication 5293, Data Security Resource Guide for Tax Professionals, at irs.gov.

MOST PEOPLE DON’T CHANGE THEIR PASSWORDS AFTER A BREACH Believe or not, only a third of users change their passwords following an announcement of a data breach, according to Carnegie Mellon University’s Security and Privacy Institute. Researchers discovered that only a third of users studied actively changed their passwords with a site after being made aware of a breach. Of those users, most of the new passwords were considered weak. Protect your data with strong, difficult-to-hack passwords and consider using secured password management software.

From algorithms to deep learning Looking for an intro to how artificial intelligence will affect the CPA profession?

Check out “A CPA’s Introduction to AI,” a whitepaper from the American Institute of CPAs and the Chartered Professional Accountants of Canada. Why learn more?

According to the whitepaper: “Simply put, AI has the potential to significantly impact accounting and assurance jobs and businesses in the near future — if it has not already.” Find it at tinyurl.com/CPA-Intro-to-AI, and check out the Technology section of the VSCPA Center for Innovation at vscpa.com/innovation/technology.

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ADVOCACY

Remote workers need state tax filing, withholding relief The Society has joined more than 120 employers

and organizations across the nation in signing a letter to Congressional leaders urging them to support state tax filing and withholding relief for remote workers during the pandemic by enacting Section 403 of S.4318, the American Workers, Families and Employers Assistance Act, and a related measure, S.3995, the Remote and Mobile Worker Relief Act. Like many states, Virginia does not generally attempt to tax nonresident teleworkers when they are physically located in another state. The accounting profession has been consistent in its support of state tax filing relief for remote workers, working with the Council on State Taxation and others to advocate for its inclusion in federal legislation.

With an unprecedented number of workers working remotely, now more than ever it is necessary to adapt to our current economic reality. The VSCPA believes that this legislation is critical to the fiscal health of Virginia, our businesses and our taxpayers and we are asking Congress to provide the relief our country needs.

Through reciprocity agreements and by operation of law, Virginia does not tax certain residents of Kentucky, Maryland, Pennsylvania, West Virginia, and the District of Columbia that work in Virginia. In return, such states provide a corresponding exemption to certain Virginia residents.

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REMOTE WORKING

‘YOU can DO THIS.’ How one VSCPA member manages remote work and homeschooling.

Niki White, CPA, chief customer officer at Strategic Risk Associates in Richmond, has worked remotely and homeschooled her two children for the past four years. Whether your children are beginning school virtually this year, tackling a hybrid option or something else entirely, Niki has advice. In a Zoom lunch-andlearn Aug. 18, 2020, she offered the following tips.

‘The biggest thing I can tell you is: Simplify.’

Simplifying your home, school and work lives will do wonders for making you feel in control. At home, declutter and get rid of visual clutter.

For schooltime, make the schedule as simple as you can for your children and take an inventory check each night to make sure you’re prepared for the next day. At work, block off time on your calendar when you know your children will need you available to answer questions, and keep other hours open for meetings.

‘I’m really stingy with my time.’

Though Niki jokes that there are 24 hours in a day and she uses every one of them, she says it’s important to be intentional when you are juggling work and school at home. Make sure you get enough sleep and that your children are doing age-appropriate activities independently, such as helping make meals or doing laundry. Only commit to activities that work with the priorities you set as a family.

Be strategic.

Plan: First, make a plan that works for your family.

Right now, Niki lays out her family’s schedule a week in advance. But based on your own needs, you may need to plan a month in advance or maybe just a day.

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Set expectations: Discuss with your child which school tasks they can complete solo and which require help. Decide which comes first and set expectations for questions and interruptions.

Delegate: Allow your children to take ownership over household tasks and celebrate their achievements. Let go of things you don’t need to do on your own (such as trading in-person shopping for a delivery service).

Follow through: Sit down with your family and review each day. What worked? What didn’t? What do you need to reset for tomorrow?

‘Don’t just get through it. Thrive in it.’

After years of balancing home, work and school life, Niki believes that she and her family have come out the other side stronger and more connected. “I’m so grateful for knowing my children more,” she says.

She believes parents should approach this fall with a positive mindset of not only surviving but thriving as parents and as families. n

PACK YOUR BACKPACK WITH THESE RESOURCES WATCH: Facebook Live Town Hall on Remote Work & Well-Being with InnerWill Leadership Institute Facilitator Wendy Berenson: tinyurl.com/yyp69lzx

WATCH: Strategies for Working & Parent at Home: A Conversation With Niki White, CPA: vscpa.com/ learning-video-archives (log in to view) READ: The School & Child Care section of the VSCPA Coronavirus Resource Center at vscpa.com/ coronavirus contains news, laws and regulations, links to handbook and other resources.

CAMICO – Sponsored Provider of VSCPA “CAMICO’s expertise, stability, and commitment to CPAs provide strong reasons for the VSCPA to choose CAMICO as its sponsorship program, year after year. The company assists policyholders with a wide variety of practice and risk management issues specific to CPAs, and the society’s partnership with CAMICO supports our efforts to provide strong benefits to our members.”

Stephanie Peters, CAE VSCPA, President & CEO

Why CAMICO? • For 34 years, CAMICO has been protecting CPAs with insurance solutions tailored to the professional services and concerns faced by CPA firms every day.

• Policyholders can call CAMICO as often as needed and consult with in-house experts on loss prevention, tax, and accounting and auditing issues — all at no additional cost.

• Receive no-cost subpoena, potential claims and reported claims assistance from seasoned in-house CAMICO Claims Specialists.

• Unlimited access to a Members-Only Site with unique tools and resources such as sample engagement letters, articles, newsletters, advisories, eAlerts, FAQs and more.

These are just some of the reasons why VSCPA selected CAMICO as the Society’s sponsored provider of Professional Liability Insurance.

Rachel Painter, AINS Senior Account Executive T: 800.652.1772 ext. 6773 D: 650.638.8098 E: rpainter@camico.com W: www.camico.com

Accountants Professional Liability Insurance may be underwritten by CAMICO Mutual Insurance Company or through CAMICO Insurance Services by one or more insurance company subsidiaries of W. R. Berkley Corporation. Not all products and services are available in every jurisdiction, and the precise coverage afforded by any insurer is subject to the actual terms and conditions of the policies as issued. ©CAMICO Services, Inc., dba CAMICO Insurance Services. All Rights Reserved.

CPA LICENSING

MOVING ACROSS STATE LINES? AVOID REGULATORY pain.

With a little forethought, you can make your move as seamless as possible.

Change is an unavoidable part of life, whether it is our social circles, family situations or careers.

Perhaps at no time are CPAs more aware of the necessity of change than when we move across state lines. Amidst the natural nervousness and excitement that comes with loading the moving van, accounting professionals have the additional challenge of relocating from under the watchful eye of one state’s board of accountancy and into the supervision of another.

David R. Peters, CPA

At first glance, these regulatory aspects can seem overwhelming. However, with forethought in the areas of licensing, continuing education and proper notice, you can make a smooth transition.

One of the unique aspects of the CPA profession is

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state-by-state regulation. Just because you are a CPA in one state does not mean you are a CPA everywhere.

When you move, it is important to know how to go about getting licensed in your new state. The process to re-establish your license in a new state is often not nearly as arduous as it was to earn your license the first time. However, you still must prove that you meet the new state’s licensing requirements.

Generally, you will need to have your CPA Exam scores sent to the new state, fill out an application for licensure and pay a fee to the new state’s board of accountancy. There also might be unique requirements to be addressed. For example, while every state generally has an ethics requirement, not all states have the same ethics requirement. A state might require you to take a specific ethics course for licensure that

CPA LICENSING

LEAVING VIRGINIA BEHIND? YOU CAN STILL BE A VSCPA MEMBER!

is different from the one you are used to taking in your former state. A state might require character references or an oath before you can receive your new CPA license. These requirements can often be the ones that slow down the application process and cause frustration for new CPAs. Often the best thing a moving CPA can do is reach out to the new state’s board of accountancy to ask about the application process at least a few months before moving, if time allows.

Another thing to be aware of is differences in continuing education requirements. While every state requires CPE, how CPE is counted and what constitutes CPE may be different from one state to the next. I moved from Virginia to South Carolina, and South Carolina has a requirement that you may only obtain up to 10 hours of CPE in any one calendar day. Most other states have no limitation.

Many states have a yearly requirement for CPE (usually 40 credits) based on a calendar year. However, this is not always the case.

Virginia requires 120 hours of CPE on a rolling three-year basis.

Additionally, some states have a fiscal year end to their CPE year.

Similarly, CPE in one state might not always count as CPE in another state. At the time of this writing, Virginia counts passing the Certified Financial Planner (CFP) exam as 30 credits of CPE. Other states award no credit for this exam.

Perhaps the most common CPE divergence among the states is in the area of the ethics class. Some states simply require a CPA to take two hours of ethics each year. Other states require a specific ethics class. South Carolina requires a regulatory ethics class to be taken every three years. A behavioral ethics class may be taken in the other years.

While the variations and exceptions are seemingly endless, one saving grace for a new CPA is that most state boards post their CPE requirements on their websites. This can help a new CPA plan out CPE in the most advantageous way possible and avoid falling into the tempting trap of thinking that all CPE requirements are the same.

Finally, it can be easy to forget about the remaining obligations to your former state. Most states require a CPA to give notice (often within 30 days) after you change your address. This rule helps ensure that a CPA receives any notices and communications that

Many CPAs who have moved across state lines remain loyal VSCPA members. You can still receive all the benefits of your membership: CPE, communications, volunteer opportunities and more! Find us at vscpa.com; log in anytime to update your address!

the board may send out. Also, if you plan on continuing to do business in your old state after you move, you should make sure that you understand your licensing obligations in your former state as well. A state might require you to register with them, or in some cases, maintain a license with them, depending on the type of work you are doing, who your employer is and whether you maintain an office in your former state. In short, your obligations to your former state don’t end after you move. It often takes weeks to work through this transition.

While the regulatory aspects of a move to a new state can seem like a lot, the best strategy is to just ask questions in advance. Your employer in the new state might be able to assist in some areas, but as a CPA, you alone are responsible for making a successful transition. Therefore, a better move is often to reach out your new board of accountancy directly.

Remember, boards want you to be in compliance, so they are often very willing to help. Lean on them. This will make your move smooth from a regulatory side, allowing you to focus on other things — like finding out what color to paint your new place! n

David Peters, CPA, is the founder and owner of Peters Tax Preparation & Consulting in Richmond as well as a financial advisor for Peters Financial, LLC. He is a national CPE instructor and discussion leader for the American Institute of CPAs (AICPA), Kaplan and Surgent, and has co-authored the VSCPA Virginia-Specific Ethics Course for the last three years. He is a member of the Disclosures Editorial Task Force. david@davidpetersfinancial.com Peters Financial, LLC 1657 West Broad Street, Unit 5, Richmond, VA 23220 (804) 332-1373 Registered Representative offering securities through Cetera Advisor Networks LLC, member FINRA/SIPC. Advisory services offered through Carroll Financial Associates, Inc., a Registered Investment Adviser. Carroll Financial and Cetera Advisor Networks, LLC are under separate ownership and are not affiliated with any other named entity.

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REOPENING

GREAT IDEAS FROM YOUR PEERS...

HOW 2 firms RESPONDED TO COVID-19

YHB CPAs & Consultants (several locations in Virginia and Maryland)

What was your company’s response to COVID-19?

As with most organizations, we took things one step at a time. First was educating our staff on what the symptoms were and the importance of not coming into the office or going to the client if you or someone you were with were experiencing them. As the cases began to rise, we started encouraging staff to work remotely but still allowed client travel and staff to come into the office. Finally, along with many organizations, we closed our office to the public March 19, stopped client travel and required all non-essential team

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members to work remotely.

YHB was extremely fortunate to have put in place technology that allowed our staff to work remotely prior to COVID-19. All of our phones, files, etc., can be accessed by our team from almost anywhere.

We are proud to say we continued serving clients through PPP, changing tax deadlines and a constant onslaught of legislative changes with relatively little disruption when switching to remote work. Doing this so smoothly allowed us to retain all of our staff and continue to hire great people throughout this pandemic.

REOPENING

We’re looking forward to life getting back to normal but aren’t letting this stop us from moving forward. We still have several big things in the works and are remaining steadfast to our vision of serving clients and our community. — YHB CPAs and Consultants

At the time, how long did you envision this temporary/ partial closure would be?

Any plans in case there would be a second wave or resurgence of the virus?

We were hoping things would be back to normal by summer.

However, we put together an initial plan that didn’t have offices returning to normal until early 2021. While we were hoping for the best we were planning for the worst.

We remain cautious and don’t see a need to rush back into getting everyone in the office. From a risk standpoint it just makes sense to have our team members work from home. We have invested in additional equipment to help keep them productive and it is working. Our number one priority is the safety of our team members and clients. We would rather adapt to the situation as it exists today then pretend it’s just going to disappear all of a sudden. We can still serve our clients, foster our unique culture and grow the firm by adapting with smart long-term changes.

What are your reopening plans?

We created a phased approach to opening offices and allowing client travel. Right now we are in our third phase, meaning: Offices are open to clients by appointment; we allow up to 50 percent capacity of staff in the office; and client travel with limited in-person engagement teams. Internally, we are requiring staff to wear masks in public spaces and have eliminated shared offices.

Most staff are still working remotely, however.

Will employees be traveling to client sites?

We are allowing staff to travel to clients but have established some best practices. Those include: requesting a large enough space for appropriate social distancing, limiting how many staff can be on site and trying to limit the amount of field time required.

How did you develop this plan?

As soon as COVID-19 began to move across the country and its health impacts became clear, YHB assembled our Emergency Task Force (ERT). The team is represented by our core business leaders: technology, human resources, marketing and operations.

In addition, our managing partner and two out of three board members were also on the task force. In the beginning the ERT met only twice a week to assess the situation and talk through what we hoped were hypothetical scenarios. It became increasingly clear these scenarios were no longer hypothetical and COVID-19 was here. During the height of the outbreak we were meeting daily but have since moved to weekly meetings. We, of course, have relied on guidance from the Virginia Health Department and the CDC immensely.

Do you have any unique challenges with multiple offices?

The ERT laid out a plan that specifically stated each office would move independently of one another. Meaning, Fredericksburg and Winchester might go to Phase 3 before Falls Church and Richmond. For the most part that is what we have done. We have also been clear with staff that we might have to go back a phase if the virus surges again. In any event, it’s been important for us to communicate openly and often to staff, so everyone is in the loop.

To help accomplish this we host firm-wide webinars every other week. They usually only last around 15 minutes but they have been highly effective at keeping us connected. Of course, we also try to have fun in them and make the best of the situation. u

REOPENING HELP If you or your firm needs assistance with how to handle reopening plans, workplace safety and more, check out the VSCPA Coronavirus Resource Center at vscpa.com/coronavirus for articles, links, whitepapers, videos and tons of other info.

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REOPENING

Keiter Richmond

What was your company’s response to COVID-19?

Keiter’s approach to our COVID-19 response has been a focus on our team’s safety and security, staying informed with the most up-to-date information available to us and implementing a flexible work arrangement with an emphasis on working remotely if possible. While we have taken a look at some of less critical expenses for the year and made some adjustments, we have not had to furlough, lay off or cut salaries at this point.

that not all clients may want us onsite or have the infrastructure ready to accept outside guests. We’ve developed a detailed checklist that our partners will review with clients prior to site visits to gain more information on the feasibility of a visit.

How did you develop this plan?

We integrated our understanding of governmental guidance and our own internal safety protocols with some client visit checklists that we’d seen other firms implement.

At the time, how long did you envision this temporary/partial closure would be?

Any plans in case there would be a second wave or resurgence of the virus?

Our leadership team considered the unknown of this entire situation and while I think we knew that it was going to be long term, I believe that we initially thought that summer would bring back more normalcy. Obviously, we’ve had to reassess and adjust as needed.

We don’t have explicit plans, but we are fully prepared to enforce restrictions on our in-office workforce in the event that we feel it becomes an unsafe environment. n

What are your reopening plans?

In compliance with Virginia standards, we are encouraging safe office practices for those who do prefer to work in the office, but still very much encouraging those who wish to work from home to do so. Many of our team members have opted to work from home, even our partners. With the upcoming school year being virtual for many of our working parents, we are also promoting open conversations on what flexibility and alternate schedules may look like for the foreseeable future.

We have worked hard to communicate regularly and share a lot of information as we receive it.

Our goal has been to be respectful of personal preferences while also placing a heavy focus on safety. As with many organizations, this situation has helped us escalate our remote working technologies and for the most part, it’s been a smooth transition. — Keiter

Will employees be traveling to client sites?

At this point our plan is to slowly introduce safe client interactions only when necessary. We understand

Special thanks to Zach Shoaf, CPA, for conducting these interviews. Zach is a senior associate in DHG's Tysons office and a member of the Disclosures Editorial Task Force.

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REOPENING

What does the ‘new normal’ look like?

As many counties and states loosen COVID 19–related restrictions for employers across the country, more questions than answers arise regarding best practices in return-to-work procedures.

This “new normal” is anything but normal, and information and best practices about how best to structure return to the workplace and how to safely behave in the workplace will likely change frequently. Firms will need to be flexible and responsive as information and best practices regarding the pandemic are updated by local governments, the World Health Organization (WHO) and the Centers for Disease Control (CDC). Now, more than ever, management needs to be thoughtful and compassionate when dealing with the myriad of feelings employees will have as they contemplate returning to the office. Employees may be feeling anxious about being in the office surrounded by others; or, due to personal or medical reasons, they may be unable to wear a mask; or perhaps they are considered at risk themselves or have an at-risk family member in their household. These are uncharted waters and trying times for employers and employees alike, and a more delicate approach may be necessary when dealing with employee issues related to this pandemic.

DAILY WORK ADJUSTMENTS Protocols should be established to cover how the firm will adhere to guidelines for physical distancing, office cleaning, meetings, business travel, client interaction, etc. Management and employees alike will have to be diligent in doing their part to ensure a clean work environment. Firms should establish protocols for cleaning public spaces (break rooms, rest rooms, elevators, stairs, lobbies, etc.) and include visual aids to mark social distancing in high-traffic areas. Firms should provide sanitizing wipes, gloves, face masks and any other protective measures.

Given the many changes to the office environment and how firms conduct business, it is recommended that management have each employee participate in an onboarding process when they return to working in the office. During the onboarding process, employees should be informed of the steps the firm has taken to ensure the employee’s safety including, but not limited to, reconfiguring the office space, restricting business travel, refraining from in-person meetings and use of hygiene stations. Additionally, the onboarding process would outline expectations of each employee in doing their part and set the stage for moving forward as well as revisiting any updates to the firm’s policies.

Preparing for employees returning to the office should be a thoughtful and deliberate process and one supported by guidelines set by state and federal health officials. As firms begin the planning process, there are several items for consideration in preparing the office and employees for the eventual return to minimize some of the potential pain points.

If possible, firms should poll employees to gain a better understanding of their concerns in returning to “business as usual.” Management should share the general responses and provide follow-up and feedback so that employees feel validated and heard.

POLICIES AND POSTINGS

OVERCOMMUNICATE

All firms should ensure that the Families First Coronavirus Response Act (FFCRA) is posted alongside any other employment posters (for employees working remotely, the posting should be sent to the employee via email). Not only should the poster be placed in a visible or high traffic area, management should also be familiar with the language and employee’s rights reflected in the posting.

Employees need to know what management has done and will do to ensure their safety. Communication should be frequent and detailed and should include what returning to work will look like, such as schedules, requirements for face masks, sanitizing, office layout and channels for employees to express concerns and suggestions.

Additionally, firms should revisit all policies and look for opportunities to be flexible and support employees during this pandemic. Leave and bereavement policies might be reviewed.

Current leave policies should also be updated to reflect any legislative updates. For employees expressing angst about returning to the office, perhaps a phased approach or a hybrid approach with part time in the office and part time working remotely might be an option reflected in the policy.

A well-thought-out and detailed plan will ensure that all important factors are taken into consideration, the risks to employees are managed, and expectations of both management and employees are clear. n Article provided by CAMICO, a VSCPA preferred provider. Copyright CAMICO 2020.

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PRACTICE DEVELOPMENT

7 MERGERS, 5 YEARS: HOW one firm DID IT If your firm is interested in growing its footprint, take cues from a managing partner who has tips and tricks, dos and don'ts ... and lots of benefits you’ll discover along the way.

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PRACTICE DEVELOPMENT

Just five years ago,

Councilor, Buchanan & Mitchell, PC (CBM) was a 38-person audit and tax practice with one office in Bethesda, Md. But after an aggressive approach to acquisition, we’ve transformed a somewhat vanilla firm into one of the area’s top 25 accounting firms (according to Washington Business Journal) that better serves its diverse client and employee base.

By Peter B. Reilly, CPA, CVA

At 94 years young, CBM merged with a firm whose emphasis was in nonprofit auditing, which bolstered our nonprofit niche and audit practice and expanded our practice to 45 employees. Since then, we have acquired six other firms, doubled our service offerings and industry niches and now employ 103 professionals. We have thrived embracing diversity and inclusion and we listen to a wide spectrum of voices.

Never wavering from our core values and assuring buy-in from our new members provides the foundation that keeps us strong and united.

As the number of professionals at CBM evolves, the makeup of its professionals has shifted, allowing an emergence of talented women leaders. The current chair of CBM’s board, Patricia Drolet, CPA, was managing partner of Drolet & Associates, PLLC, a firm CBM merged with in 2014. She even won this year’s VSCPA 2020 Ruth Coles Harris Advancing Diversity & Inclusion Award.

If your firm is interested in merging, CBM has advice!

Read on for dos and don’ts and to learn about the benefits CBM has enjoyed from our mergers.

DOS AND DON’TS Do: Review a firm’s profile.

When a firm is targeted, its profile needs to be reviewed prior to a personal introduction. Basic information such as number of employees, salaries, types of services and client mix need to be understood.

The same information requested in INSIDE Public Accounting or The Rosenberg Survey can be used as a guide. Should you find some interesting possibilities — like new industry or service niches, additional talent, bolstering of existing niches, etc. — then why not meet? Reviewing the profile of the targeted firm (i.e., prospect) with the candidates themselves is helpful

and insightful. I have found prospects enjoy answering questions and elaborating about the information on the profile sheet, particularly when it pertains to themselves and their firms.

During the introductory meeting, the prospect’s leadership should demonstrate qualities such as concern for staff and clients. This shouldn’t be an afterthought. We have found that prospects who lead with a “What’s in it for me?” attitude usually aren’t a good fit. It’s also important to discuss their perceived benefits and obstacles to the merger.

Do: Craft a term sheet.

It’s never too early to present a term sheet to the prospect. Provided the introductory meetings have gone well, then a working draft of the proposed terms can become the focus for future meetings. Each merger and acquisition where we have been involved could just as easily be described as business transitions or soft-landing retirements. CBM’s term sheets are one page and include: position, base compensation, eligibility for bonus, expected annual billings, expected annual charge hours, retirement (start date, percent of cash collected or annual salary and term of payment), committee involvement, firm equity and a list of benefits.

Don’t: Go it alone without lawyers and consultants.

If you aren’t careful, legal costs can become a significant expense. We are at the point where we encourage the prospect to use a lawyer, but we will not absorb that cost as part of coming together. Also, spending time ironing out the details and putting those into a term sheet ahead of time will mean less time — and money — spent on legal. On two separate early mergers, we found investing in consultants to be money well spent. In one case, Terry Putney of Transition Advisors helped us save $30,000 on a tail policy that had been inserted by our insurance carrier, and Gary Adamson of Adamson Advisory pointed out how a certain deal made more sense as a retirement payout based on cash collections versus a percentage of average salary.

Do: Put on your project management hat.

Once these management-level considerations u

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PRACTICE DEVELOPMENT

CBM INCREASED SERVICE OFFERINGS have been satisfied, you will now face a considerable number of operational priorities. We use a detailed spreadsheet that assigns each task associated with the impending merger, including completion dates. We have found that assigning a point person from each firm assures smooth integration. The spreadsheet is broken down by client setup, employee setup, equipment assessment, training and marketing, among other operational areas. One person from each firm familiar with the area indicated on the spreadsheet should take responsibility and be held accountable for its completion. This can involve weekly meetings to better ensure that there are no surprises.

AUDIT

TAX

CAS

CONSULTING

2014

55%

45%

0%

0%

2015

50%

40%

5%

5%

2016

48%

40%

7%

5%

2017

40%

40%

10%

10%

2018

35%

35%

15%

15%

2019

31%

35%

16%

18%

Do: Invest in infrastructure.

Going deeper into operations inevitably means tackling infrastructure as well as the ability to integrate the merged team into your firm’s policies and procedures. This includes deploying technologies such as work-flow systems, a portal, scanning and artificial intelligence, among other items, to assist with efficiency.

Members of the acquired firm must understand and agree to comply with your tax preparation, delivery process and report production process. In one of CBM’s earlier mergers, our team saw an advantage in combining the best of both firms when it came to formatting and processing financial statements. Even though we have been peer reviewed for the last 30 years, we acquiesced to the desires of the new team, the result of which was a change to all 350 financial statements, rather than having the acquired firm conform to already established and compliant reporting. In the end, our financial statement presentation is more robust and pleasing to the eye and gave both firms a chance to work together for the desired results.

Do: Respect client information and notification.

As part of our due diligence in reviewing the prospect’s work papers, confidential client information may come to light. It is of paramount importance that confidentiality agreements are signed, including by those doing the review of the prospect’s work papers, not just the individual representative of the firm. Also, the American Institute of CPAs (AICPA) has issued guidance on transfer of client files in which the selling firm requests, in writing, the consent from its clients to transfer its files to the successor firm.

All employees are provided a list of audit clients for review shortly after the merger to assure independence.

Don’t: Delay team transitions until the merger is complete.

Integration must start immediately and should align with when the staff of the firm being acquired becomes aware of the transition.

There is no need to wait for an official merger date. This is the

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process when team members of both firms learn about the impending transition and begin the process of joining together, becoming members of the new firm — one firm. Integration must remain a focus throughout the first two to three years. Some individuals acclimate immediately, while others are more of a slow pour. Constant attention must be paid to the integration process.

Training sessions need to be scheduled and refresher courses made available. This is particularly important when new software is being introduced. Frankly, from past discussions with staff from both firms, there can never be enough training.

Mentors also play a vital role in easing fears and uncertainty. Also, mentors help in aligning firm and staff goals, including training and smooth assimilation. Open houses, happy hours and group meetings add to a feeling of inclusiveness. Communication must be open, happen often and always be a two-way street. If there is more than one office involved and the distance is not preclusive, then regular visits and exposure will add to the belief in one firm.

Don’t: Focus more on billing rates than operational efficiencies.

One temptation when merging in a new firm is to overemphasize discrepancies in billing rates and salaries for similar positions across both practices. However, billing rates end up being less important than the acquiring firm’s workflow systems, which incorporate technology and operational procedures. Salaries can become similar by position within a year or two as long as billing rates are moved up accordingly. One of CBM’s early acquisitions paid employees significantly less than CBM did, which might at first glance have led to the assumption that that firm’s clients were used to lower billings. However, since CBM had invested in sophisticated technologies and developed strong internal processes, its workflow delivered efficiencies that led to billings competitive with those of the acquired firm. In addition, today our

PRACTICE DEVELOPMENT

employees are paid a reasonable rate by position. Billing rates are important yes, but just as important — if not more so — is how the work gets done. Efficiencies and increased productivity can neuter the impact of billing differences.

Do: Give special consideration to integrating sole proprietors into the leadership team.

fact, it felt more like standing on one of those Star Wars planets with Darth Vader’s Death Star bearing down on you. It’s true that once you double in size and add a diverse group of people to your organization, you are a different firm entirely. But in the end, we are who we are — and we like who we are.

REAP THE BENEFITS

Many sole proprietors are in business by themselves for a reason. Without a history of working with other stakeholders at a professional services firm, they can suddenly find themselves being asked to compromise as only one of several decisionmaking management team members.

Despite what might seem like living life at warp speed, the benefits of merging a practice (or several) into your own should make the journey worth it. Here are some of the benefits we’ve enjoyed as we’ve welcomed seven firms into the CBM fold over the past five years.

They may, in fact, find the process quite challenging. Although this is certainly not true of all sole proprietors, they deserve some special consideration including due diligence beyond the numbers. A recent sole proprietor acquisition provided CBM with a significant number of attorneys to provide tax and consulting services. However, he struggled badly adapting to our basic policies and procedures during the integration process (which was costly for CBM), resulting in a parting of ways after only 20 months. While CBM retained several of his clients, the toll on our team was significant.

Diversity and inclusion: Believe in the power of diversity and inclusion! The addition of people will allow you to grow into it.

The benefits to your firm from having differing perspectives cannot be overstated. Women, men, immigrants, minorities and LGBTQ individuals working together on the same team provides effective solutions. Culture is enhanced and your firm’s collective network is ever-expanding. Currently, CBM’s leadership stands at 44 percent female. The firm, as a whole, is 65 percent female, while minorities make up 30 percent.

AND REMEMBER: Change isn’t for everyone. After CBM acquired a smaller practice in 2014, the makeup of CBM’s leadership team noticeably changed, and professional considerations began to intersect with personal ones. The first change was the addition of two female partners (through acquisition), to a leadership team of five male partners. During 2015, we welcomed one of our four 30-something senior managers to partner, making three out of our eight partners under the age of 40 and the other three in their 30s on track to partner. The future was youthful and bright for CBM. And then all hell broke loose. One of the young partners, suffering from sole proprietor syndrome, left the firm to start his own nonprofit practice — with our clients. The terms of our employment contract were adhered to and a favorable financial agreement was consummated.

For family reasons, another partner needed to head back to New England, and then a senior manager next in line for partner left CBM for an outstanding job working for our largest client. All of this left us feeling like we surely weren’t in Kansas anymore. In

Clear goals and expectations: Our growth has allowed us to establish a full-time professional development (PD) director. Our PD director’s performance is measured by the effectiveness of “Project Clear Path,” in which everyone is assigned a mentor and has a customized learning schedule that ensures that individual goals and CBM goals are aligned. The growth that has resulted from these mergers has, in no small way, provided CBM with the tools, education and resources — through Project Clear Path and through a dedicated manager — helping to create future leaders of CBM. Additionally, through CBM’s D-PATH, a part of Project Clear Path focusing on diversity and inclusion, our future leaders are assured to be diverse and reflective of our cultural surroundings with that assistance.

Service offerings: Five years ago, while we looked at things through a tax or audit approach, the real need for outsourced accounting services became apparent. We were lucky enough to have a senior manager with excellent technology skills take on the leadership role in directing our CAS effort. He designed our system and used a menu approach in offering CAS outsourcing. We have spread awareness through various marketing efforts, which in turn has generated significant organic growth. The addition of each u

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PRACTICE DEVELOPMENT

REVENUE BY INDUSTRY NICHE 2014

2015

2016

2017

2018

2019

Auto Dealerships

32%

27%

27%

26%

20%

15%

Construction/ Real Estate

18%

12%

11%

10%

7%

9%

Nonprofits

32%

40%

40%

36%

29%

32%

Professional Services

4%

7%

8%

12%

19%

15%

Tax/Wealth Management

14%

14%

14%

16%

25%

29%

new firm has provided cross-selling opportunities contributing to our significant growth of CAS. Adding additional firms has also meant additional services. In addition to assisting in the growth of CAS, we have added financial planning, divorce litigation support (including collaborative), multi-state tax expertise and a separate investment management company. At the same time, our business valuation and forensic work have grown commensurately. Whereas in the past, CBM was a 55 percent audit / 45 percent tax firm, today we have a practice that is 35 percent audit, 35 percent tax, 15 percent CAS and 15 percent consulting.

Industry niches: For a long time, we managed our industry niches with marketing plans designed by Jean Caragher of Capstone Marketing. Our concentration was in automotive, nonprofit, construction/real-estate, individual/estates and trusts, wealth management and divorce litigation. We have established two additional industry niches that have the same reporting requirements and provide many cross-selling opportunities. Most recently, the addition of new professionals has allowed us to expand our professional services and government contracting niches. We also expanded into other areas requiring specialization and regulation, including ERISA engagements and SOC 1 and 2 audits, as well as collateral audits. Due to these expanded niches, we have been fortunate (again, due to our mergers) to have the above-mentioned Project Clear Path professional development program, which provides our staff with opportunities to expand and apply their knowledge to our varying practice areas. The goal is that each professional will ultimately choose to specialize in an area that meets their aspirations.

Marketing: Marketing plays a critical role throughout the merger process, from presenting the target firm’s profile to your partner

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group, to ordering business cards with current addresses and contact information. Our client database, prospect database and national and local media receive our press releases. Press releases introduce our new firm to the community, including our new niches or enhanced services. We have issued press releases when the addition of new space is procured, including recognition of those involved in the acquiring, designing and building of the new space.

We have also placed an emphasis on our new spaces for being recognized as state-of-the-art training facilities. As a result of our client’s and prospect’s interests in financial planning and the changes to the tax law and new nonprofit accounting standards, our training facilities have remained filled with clients and prospects. E-newsletters are regularly distributed highlighting our industry and services niches, including announcements about changes within the firm. Of course, our marketing director’s expansion of our involvement with social media and its integration with our website has grown past my abilities to meaningfully explain.

Partner and director accountability: As CBM’s service offerings and industry niche concentrations have grown, so has the opportunity for our professionals to manage and report on their respective business units. Their responsibilities as a director of a business unit includes management, professional development, strategy, marketing, communications and reporting. Each director is provided data and statistics on the niche monthly, and they report to the partner group on a quarterly basis. Firm management is one of the components in determining partner and director compensation, so being appointed to serve as a niche director provides additional growth and financial incentives. Also, our marketing, professional development and HR directors report to the partner group in a similar fashion. This provides both partners

PRACTICE DEVELOPMENT

GET MORE IN DEPTH WATCH: "Growing Strategically: Anticipating Changes," Aug. 21, 2020, webinar from Pete Reilly for Upstream Academy. Available on the CBM website at tinyurl.com/yxlourbv.

LEARN: "Buying & Selling A Business: Critical Tax & Structuring Issues," Nov. 18, 2020, virtual seminar. Register at vscpa.com.

READ: "So You Want to Expand Your Practice. Now What?," by Tom Mishoe, CPA, CMA, MBA, May/June 2015 Disclosures article, available at vscpa.com/expand-now-what.

and directors the opportunity to demonstrate skill sets that go beyond outstanding client service.

diversified across services, industries, people and personalities — and we’re all the better for it.

CEMENTING THE DEAL

Our firm has peaked at 100 people so that we can remain “small.” Small in the sense that we continue to provide personal service as our clients’ needs change, supplying the demand of multiple services. Today we meet our client’s diverse needs in a smarter way. n

There is immediate payroll coverage needed for the newly acquired employees, so we ask for a contribution of the predecessor firm’s WIP and Accounts Receivable to cover about two to three months of payroll. The amount of money collected above a set amount — their contribution to CBM — will be returned to the acquired firm once collected.

The acquired firm can keep their furniture and computer equipment (realistically, you will just be replacing it sooner than your best budget estimates).

Call it a merger, an acquisition, a marriage, a two-step process — whatever you want. In the end, the merger is a retirement arrangement. If an individual is later in years, then consider a retirement payout based on a percentage of cash collections. Younger partners will receive an eventual retirement based on the average of the last five years’ salary. Hire all non-partner employees with your existing employee contract.

Remember that, ultimately, it’s all about your collective staff and your clients. You can’t predict what your new normal will be like, but since you will never compromise your core values, it will be fine. In all likelihood, better than fine. Through growth we are

Peter B. Reilly, CPA, CVA, is president and managing partner of Councilor, Buchanan & Mitchell, PC, (CBM) in Bethesda, Md. He has 40 years of audit and tax experience in planning and supervising engagements in the construction/real estate, automotive and nonprofit ndustries. Pete has presented on this topic for industry groups including the American Institute of CPAs (AICPA), Rainmaker Companies, Upstream Academy and more. preilly@cbmcpa.com tinyurl.com/y5y657f9 cbmcpa.com @cbmcpa

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CPA PROFESSION

A NEW

horizon FOR THE CPA

The world is rapidly changing – and, along with it, the CPA profession. The CPA Evolution initiative will move the designation in a new direction.

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CPA PROFESSION

Data analytics, artificial intelligence, virtual

to technology and information systems — and relying on CPAs to show deeper skills like critical thinking, professional judgment/skepticism, data management and much more.

workspaces, remote learning … The professional life of a CPA is a far cry from the physical general ledgers of the past. The skills and competencies CPAs need today to continue to provide high-level services to their companies and clients are rapidly changing.

THE PROFESSION RESPONDS

Not only that, it’s difficult to keep up with the current accounting body of knowledge. Compared to 1980, there are: Jill Edmonds

> Three times as many pages in the U.S. Internal Revenue Code > Four times as many accounting standards > Five times as many auditing standards It’s enough to make anyone’s head spin. To ensure compliance, companies are turning more and more

NEW CPA EXAM MODEL

To ensure the CPA designation remains relevant in this changing landscape, the American Institute of CPAs (AICPA) and National Association of State Boards of Accountancy (NASBA) spent three years gathering information on how best to transform licensure for the future. The resulting CPA Evolution initiative includes input from more than 3,000 stakeholders, including state CPA societies, firms, colleges and universities, students and others.

According to the AICPA, the No. 1 comment received was support for the need to change the path to licensure. Respondents asked for a greater emphasis on technological skills as a licensure prerequisite.

In the fall of 2019, the AICPA and NASBA reviewed feedback and considered multiple options before releasing a recommended new licensure model.

THE FUTURE CPA EXAM The new Exam model includes a core of accounting, audit, tax and technology, and then three disciplines: tax compliance and planning, business reporting and analytics and information system and controls (see left).

Every candidate will have to pass the same core, but then individually choose one discipline in which to demonstrate deeper skills. The Exam will still consist of four sections: three for the core and one for the chosen discipline. It is not planned to take more than the current 16 hours.

Ultimately, the allocation of content of the core and disciplines will be u

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CPA PROFESSION

determined by revisions to the education requirements of state boards of accountancy and through a CPA Exam practice analysis.

The disciplines will not pigeonhole a candidate into a certain career track, however. Candidates are not limited to practicing in that one area; the discipline is just an opportunity to demonstrate deeper skills and knowledge.

The model is designed to reflect the current reality of practicing as a CPA, be adaptive and flexible and enhance public protection, and is expected to launch in January 2024.

THE VSCPA’S INVOLVEMENT As part of the input process with the AICPA and NASBA, VSCPA leaders and staff provided input at various parts of the CPA Evolution process. On April 29, 2020, the VSCPA Board of Directors voted to support the Initiative and issued a resolution, which you can find online at vscpa.com/evolution-resolution.

“The business environment is rapidly changing, and it has become clear to the CPA profession as a whole that the requirements for licensure need to evolve to meet the demands of this new reality,” said VSCPA President & CEO Stephanie Peters, CAE. “The VSCPA Board discussed the CPA education, experience and exam requirements at length and ultimately determined to support the initiative of the AICPA and NASBA, which allows CPA candidates to continue to receive the accounting and taxation skills they need but also focus on information systems and controls if they choose.”

APPROVAL AND IMPLEMENTATION In May 2020, AICPA Council voted to advance CPA Evolution and the NASBA Board of Directors followed suit in July. NASBA also issued an exposure draft over the summer to change the Uniform Accountancy Act (UAA) Model Rules in support of CPA Evolution (the comment period ended Aug. 31).

Now, to make the new licensure model a reality, NASBA will encourage state boards of accountancy to implement any model statutory and rule changes in education necessary. The UAA is a model act and rules, however, that are intended to be a guide and are not required to be adopted in every state, including Virginia.

Because of Virginia’s principles-based approach, the Virginia Board of Accountancy (VBOA) will not need to seek statutory or regulatory changes to implement CPA Evolution. The VBOA did, however, submit feedback during NASBA’s open comment period.

The VBOA pointed out several changes in the Model Rules that do not align with current Virginia regulations and the VBOA does not intend to make those proposed revisions at this time.

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GET MORE Everything you need to know about CPA Evolution is at evolutionofcpa.org, including information on the process, FAQs and much more. n

Jill Edmonds is the VSCPA communications director and managing editor of Disclosures magazines, where she oversees all communications strategy, including print and social media. jedmonds@vscpa.com

GOT QUESTIONS? Many CPA Evolution FAQs are available at evolutionofcpa.org, but here are a few: What are some examples of the skills new CPAs will need? NASBA and the AICPA have heard from stakeholders across the profession that new CPAs increasingly need deeper skills and knowledge in areas such as, but not limited to, critical thinking, professional judgment/skepticism, problem solving , understanding of the business (including systems, controls and risk), data management and analysis and performance of System and Organization Controls (SOC) engagements.

How will CPA Evolution affect current CPA candidates?

Current candidates will still be able to sit for the current CPA Exam until the launch of the new Exam. A transition plan will be developed for candidates who have started, but not completed, the CPA Exam process by January 2024.

Does CPA Evolution address the 150-hour educational requirement? CPA Evolution will change the CPA Exam to better meet today’s business demands, but there is no current proposal to alter the 150-hour educational requirement for CPA licensure.

ANNUAL VIRGINIA ACCOUNTING

and AUDITING VIRTUAL CONFERENCE

Nov. 18–20, 2020 | Online Up to 16 CPE credits The 50th Annual Virginia Accounting & Auditing Conference is going virtual in 2020! We’ve adopted new and improved online learning practices that we can’t wait to share with you. Rest assured we’re fully committed to delivering the same quality content and experience you’re used to.

This year only, you may attend for a reduced rate of $325. Learn more and register at vscpa.com/A&AConference.

VSCPA

Congrats to the following members

Brad Butler, CPA, CGMA, Reece Chalkley, CPA, Hope Cupit CPA, Terri McKnight, CPA, Lisa Schapira, CPA

NEW HIRES John Riley, CPA, has joined Ankura as senior managing director. He was the acting chief accountant of the U.S. Securities & Exchange Commission in 1995.

Turton, CPA, and Dan Yue, CPA, to manager; and Chris Roth, CPA, to senior associate.

APPOINTMENTS & AWARDS Gov. Ralph Northam has made the following appointments:

PROMOTIONS The following members were promoted at Thompson Greenspon in Fairfax: Nicholas Bilyeu, CPA, to audit senior; Josh Gannett, CPA, to audit manager; Eric Goble, JD, EA, to tax supervisor; Michael Ioffredo, CPA, to tax supervisor; Beth McGinty to audit supervisor; Sue Shaughnessy, CPA, MST, to tax manager; Alexander Scott, CPA, to tax supervisor; Mallory Werth, CPA, MSA, to audit manager.

The University of Virginia Foundation in Charlottesville has promoted Brad Butler, CPA, CGMA, to chief financial officer.

Reece Chalkley, CPA, has been promoted to tax manager and Lisa Schapira, CPA, to tax senior at Kimble CPA in Richmond.

At Mitchell, Wiggins & Company, LLP, in Richmond, Carman Faison, CPA, has been promoted to partner and Josh Morrison, CPA, to senior manager.

CST Group, CPAs, PC, in Reston, announces the following promotions: Melissa Flieg, CPA, and Jenny Kim, CPA, to senior manager; Andrew Lampropoulos, CPA, Oana

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• Hope Cupit, CPA, president of Southeast Rural Community Assistance Project in Roanoke, to the State Air Pollution Control Board.

• Terri McKnight, CPA, partner and head of audit at GRF CPAs & Advisors in Bethesda, Md., reappointed to the Christopher Newport University Board of Directors.

• Lori Overholt, CPA, president of VSA Resorts in Virginia Beach, to the Common Interest Community Board.

Matthew O. Faircloth, CPA, tax manager at Berg, Faircloth & Company, CPAs, in Leesburg, has been selected to attend the 2020 Leadership Academy at the American Institute of CPAs.

FIRM NEWS CST Group, CPAs, PC, in Reston, has launched a new outsourced accounting company called District Advisory.

The group will assist clients with day-to-day accounting, CFO oversight, financial modeling, forecasting and strategy, as well as offer integrated business solutions.

VSCPA

Kudos to these Virginia 500 members The following members

were named by Virginia Business magazine to its Virginia 500: 2020 Power List: • Timothy Gillis, CPA, partner, KPMG, Washington, D.C. • Jason Hartman, CPA, partner, Brown, Edwards & Company, LLP, Roanoke • Dan Hudgens, CPA, partner, Deloitte & Touche, Richmond • Terri McClements, CPA, partner, PwC, McLean • Susan Moser, CPA, partner, Cherry Bekaert, Tysons • Scott Moulden, CPA, principal, Yount, Hyde & Barbour, PC, Winchester • Kevin Virostek, CPA, partner, Ernst & Young, Tysons • Gary Wallace, CPA, partner, Keiter, Richmond • Alan Witt, CPA, president & CEO, PBMares, Newport News And, the VSCPA’s very own President & CEO Stephanie Peters, CAE, was also named to the Virginia 500 list.

SEND US YOUR NEWS!

We want to hear from you! The VSCPA prints news of members’ awards, appointments and promotions as well as new hire and job change announcements. We’re happy to print headshots; please make sure you send a highresolution, 300 dpi photo. Email disclosures@

IN MEMORIAM Dallas D. Brunk, CPA, a Life member from Roanoke. A Vietnam War veteran, he earned a U.S. Air Force Conduct Medal of Honor. He worked at Brown Edwards and KPMG Peat Marwick before opening his own practice, Brunk & Company, PC, and was named a Super CPA by Virginia Business magazine. He was an avid member and leader of the Salem Sports Foundation.

Wilbur “Bill” DeZerne, CPA, a Life member from Manassas. Bill was 99 years old and married for 78 years; his wife Lucy passed away three days after he did this past August. A World War II veteran, he pitched for the New York Giants farm team and also on several baseball teams organized by President Roosevelt to entertain troops. He is a former director of the Office of Audits in the U.S. Department of the Treasury and spearheaded an international team that advised Middle Eastern countries on developing financial management systems.

Joseph E. Gibson, CPA, JD, a Life member from Charlottesville. The Peat, Marwick, Mitchell professor emeritus of professional accounting in the U.Va. McIntire School of Commerce, Gibson served in World War II and joined the U.Va. staff in 1956, where he taught for 48 years. He edited the Michie's Federal Tax Handbook and co-authored the CPA Exam for several years.

He received the U.Va. Alumni Association's Distinguished Professor Award in 1975 and the VSCPA Educator Award in 1977. He served in dozens of professional and community capacities and on several VSCPA committees in the 1960s and 1970s.

Richard G. Thurston, CPA, from Barboursville.

An ordained minister, he worked at Hantzmon Wiebel LLC and Seminole Trail Properties LLC. He was an avid musician and played in the local Charlottesville First and Second Wind Bands and Flashbacks ensembles.

vscpa.com if you have exciting news to share.

DISCLOSURES

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VSCPA

Staff news Pictured clockwise: ANNIVERSARIES Sept. 3: Public Affairs Director Tim Barry, one year Sept. 9: Communications Director Jill Edmonds, one year Sept. 22: Online Learning Specialist Kathy Suddarth, six years Sept. 22: Peer Review Coordinator Jane Hayes, 17 years Oct. 11: Finance Assistant & Facilities Coordinator Ben Munford, four years Oct. 29: Membership & Marketing Director Julia Henderson, seven years

The VSCPA’s newest Virginia CPA licensees Stephen Brager, CPA, Alexandria Yong Jie Chua, CPA, McLean

Gov. Ralph Northam declared Sept. 1319, 2020, as Virginia CPA Week. Because VSCPA members, firms and companies are the business advisors citizens trust, the VSCPA branded the week ‘Count on CPAs’

Shawn Dunford, CPA, Winchester

and promoted using the #CountOnCPAs

Courtney Everitt, CPA, Norfolk

hashtag on social media. Members were

Jason Kornreich, CPA, McLean

given branded social images for use in their own feeds and encouraged to tell

Robyn Robles, CPA, Norfolk

their clients about CPA Week, and the

Nathan Turley, CPA, Winchester

Society posted videos throughout the

Katelyn Turner, CPA, Arlington

week. Firm leaders were encouraged to use the week as a time to celebrate their

Margaret Walker, CPA, McLean

own CPAs. For more info, check out

Ian Walsh, CPA, Charlottesville

vscpa.com/CountOnCPA!

List from July 1, 2020, to Aug. 18, 2020.

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EVERYONE CAN ‘COUNT ON CPAs’

DISCLOSURES

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SPOTLIGHT

Virginia has 2 Elijah Watt Sells Award winners Taking the CPA Exam is hard enough. For a select group of new CPAs, their hard work paid off with the prestigious Elijah Watt Sells Award, given to the country’s highest Exam performers. To receive the recognition, candidates must pass all four sections on the first attempt and obtain a cumulative score above 95.5 across all four sections. The VSCPA has two members who knocked it out of the park in 2019.

TOM MAGUIRE, CPA Financial Services Assurance Associate, PwC, McLean Hometown: Atlanta University: Georgetown To prepare for the Exam: I took the Exams the summer after graduation, which made it easier because I wasn’t juggling work and studying. I just treated studying like a full-time job and crammed for 2–3 weeks before each one.

My advice to CPA Exam takers is: Just do as many multiple-choice practice questions as you can. Set aside the time you realistically need to get the studying done and stay disciplined. There’s not really a secret sauce sadly, it’s pretty much just hard work.

I wanted to be a CPA because: I think the broad base of in-depth technical knowledge that comes with studying for the CPA is extremely helpful for any career in business. I wanted to be able to look at a company’s financial statements and have a comprehensive understanding of everything in there.

If you understand the financials you can understand what drives their core business, what their prospects going forward look like and how high quality their earnings are. It’s an overused expression but it’s true that accounting is the language of business.

My career aspirations include: In the short term, our firm has been working a lot with automation which has been the most exciting aspect of the job in my opinion .... Longer term, I’m currently studying for the CFA so I’m interested in pursuing roles that utilize the foundational accounting knowledge I have, but apply it in a more forward-looking manner.

My favorite things to do during quarantine are: I’ve attempted to cook more often and more creatively with pretty mixed results. I watched Hamilton a couple times and listened to the soundtrack about 100 more. The king is my personal favorite.

DISCLOSURES

JULIA IOFFREDO, CPA Senior Accountant, KWC, Alexandria Hometown: Bannemin, Germany Degrees: B.A. in Tourism Business Administration from the Berlin School of Economics and Law, Accounting Certificate Program at George Mason University To prepare for the Exam: I used the Gleim CPA Review course to study. I read the outline and did the practice problems that were recommended. But I also frequently went back to previous chapters and did additional practice problems to maintain my knowledge until I was ready to take the Exam.

My advice to CPA Exam takers: Do lots of practice problems!

People don’t know this, but: I grew up on Germany’s second largest island.

For fun, I like to: Hike, travel and bake.

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CLASSIFIEDS

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Expand Your Leadership With Virtual CPA LEADx Dec. 1–3, 2020 | 18 CPE Credits A 20% COVID discount will be applied at checkout for this event.

In order to become a more resilient leader in this new normal, you must first understand your leadership style and what leadership looks like today.

And to help you gain a greater self-awareness of your leadership style and strategies for leading others, we’ve reimagined Leadership Academy to bring you Virtual CPA LEADx. This program is facilitated by InnerWill, an industry leader on values-based leadership training, and is designed for emerging leaders in all industries with 3–6 years of experience.

Space is limited. Register at vscpa.com/CPALEADx by Oct. 30, 2020.

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HELPING ACCOUNTANTS WRITE THEIR NEXT CHAPTER. Let us help you find your next opportunity. Bank financing is available! Visit our website www. poegroupadvisors.com for resources and current listings. Email cpoe@ poegroupadvisors.com or call today 888-246-0974.

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SELLING Your Practice?

Call Today...

Sell By Year End!

Delivering Results - One Practice At a time Wade Holmes

888-847-1040 x2

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