Insight Magazine - Fall 2025 /// Illinois CPA Society by Illinois CPA Society /// Insight Magazine

Exploring the issues that shape today’s business

Independence at a Crossroads

Should Your Firm Take the Private Equity Path?

How to Build a Standalone CAS Practice

Blockchain Use and Audits: Are Firms at Risk?

Tips for Creating Internship Programs With Impact

Recruiting Talent From Alternative Sources

Does Your Mentorship Program Need a Makeover? And More!

ceooutlook

Geoffrey Brown, CAE President and CEO, Illinois CPA Society

Choose Your Own Adventure: Investors or Independence

As CPA firm leaders think about the future of their organizations, we want them to know that they have options.

Given the hyperfocus on mergers and acquisitions (M&A) and private equity (PE) investments driving growth and innovation across the industry, it may not always seem like there are other ways for certified public accounting (CPA) firms to keep up!

Traditional M&A activity has long been a foundational element of the business and a means for not only growth but also succession planning. Today, PE investments are creating similar opportunities for firms to accelerate their growth and position partners and emerging leaders for the future. However, taking a PE investment or pursuing a merger or acquisition may not be right for every CPA firm, and I want to say that’s OK.

My reminder to CPA firms that want to remain independent and focus on organic growth in today’s fast-consolidating landscape is that they need to be bold, strategic, and deeply intentional. They must put an inordinate amount of focus on firm governance, strategy, and technology.

Why?

Firms with sound governance retain talent and consistently deliver high-quality client experiences, which positions them for long-term, sustainable success. This creates a more attractive firm and a more attractive opportunity for the next generation of talent to step up and consider paths to leadership.

Firms that focus on strategy and their vision for the future are better equipped to capitalize on new trends, technologies, and adapt to market demands, which again helps ensure their sustainability and

resilience. Maintaining a strategic mindset and focused vision unlocks innovation, drives effective resource allocation, and spurs investments that unlock growth potential.

Firms that embrace technology can’t get left behind. With technology transforming so quickly, nearly every aspect of how CPA firms operate is being impacted. Staying abreast of the latest developments and adapting to these changes is essential for firms to not only operate efficiently but also to remain competitive in today’s environment.

I hear from member firms daily that uncertainty about the future given our current economic environment gives them pause. Naturally in business, uncertainty about the future leads to instability and risk. In a profession like ours, where client and public trust are imperatives, the stakes feel even higher. What I can say to you is that it takes time and concerted effort to invest in good governance, develop a strategic roadmap, and embrace technology. These aren’t short-term initiatives; they’re long-term strategic steps that’ll be well worth the return on investment down the line. Most importantly, that concerted effort can preserve something that’s on the verge of becoming increasingly rare in our industry: independence.

The Illinois CPA Society is proud to recognize our 2025-2026

Young Professional Ambassadors

YP Ambassadors are elite volunteers who serve as a link between young professionals, their firms, and ICPAS. The program develops leadership skills for Ambassadors and cultivates a sense of community among young professionals at each firm.

Jonathan Acevedo, CPA Wipfli LLP

Sandra Arredondo Deloitte

Sam Citro, CPA Miller Cooper & Company Ltd.

Katie Coffey, CPA PwC

Paige Cohen, CPA Forvis Mazars LLP

Kiara Crick, CPA Deloitte

Suchita Farkiwala Deloitte LLP

Annie Ferconio, CPA RSM US LLP

Maria Garnica ORBA

Mirela Horozovic, CPA PwC

Yunhui Kim, CPA EAG Chicago Northwest

John Lancaster, CPA Porte Brown LLC

Nicole Maimon, CPA Deloitte

Courtney Mohr, CPA Lauterbach & Amen LLP

Chad O’Kane, CPA Sikich LLP

Collin O’Keeffe, CPA Plante Moran PLLC

Rachel Ott, CPA StoneTurn Group

Ivy Pineda, CPA Baker Tilly US LLP

Marlena Rebidas RSM US LLP

Kevin Ryan, CPA BDO USA LLP

Ben Samson, CPA FGMK LLC

Freddy Thomas, CPA Plante Moran PLLC

Danika Tillis, CPA RSM US LLP

Bo Wang, CPA Mitchell & Titus LLP

Catherine Weltzer, CPA FGMK LLC

Are you interested in serving as a YP Ambassador?

Contact Malia Cook-Artis at Cook-ArtisM@icpas.org

ILLINOIS CPA SOCIETY

550 W. Jackson Boulevard, Suite 900, Chicago, IL 60661 www.icpas.org

Publisher | President and CEO

Geoffrey Brown, CAE

Editor

Derrick Lilly

Assistant Editor

Amy Sanchez

Senior Creative Director

Gene Levitan

Proofreaders

Kristin McGill | Mari Watts

Photography

Derrick Lilly | iStock

Circulation

Jeff Okamura

ICPAS OFFICERS

Chairperson

Brian J. Blaha, CPA | Winding River Consulting LLC

Vice Chairperson

Mark W. Wolfgram, CPA | Bel Brands USA Inc.

Treasurer

Jennifer L. Cavanaugh, CPA | Grant Thornton LLP

Secretary

Lindy R. Ellis, CPA | Ernst & Young LLP

Immediate Past Chairperson

Deborah K. Rood, CPA | CNA Insurance

ICPAS BOARD OF DIRECTORS

Amy M. Chamoun, CPA | Cherry Bekaert Advisory LLC

Pedro A. Diaz de Leon, CPA, CFE, CIA | Sikich LLP

Kimi L. Ellen, CPA | Benford Brown & Associates LLC

Monica N. Harrison, CPA | Tinuiti

Joshua Herbold, Ph.D., CPA | University of Illinois

Enrique Lopez, CPA | Lopez & Company CPAs Ltd.

Kimberly D. Meyer, CPA | Meyer & Associates CPA LLC

Girlie A. O’Donoghue, CPA | Portillo’s Inc.

Matthew D. Panzica, CPA | BDO USA PC

Jennifer L. Rada, CPA | PwC LLP

Leilani N. Rodrigo, CPA, CGMA | Galleros Robinson CPAs LLP

Richard C. Tarapchak, CPA | Verano Holdings Corp.

Andrea Wright, CPA | Johnson Lambert LLP

Stephanie M. Zaleski-Braatz, CPA | ORBA

BACK ISSUES + REPRINTS

Back issues may be available. Articles may be reproduced with permission. Please send requests to lillyd@icpas.org.

ADVERTISING

Want to reach 20,250+ accounting and finance professionals? Advertising in Insight and with the Illinois CPA Society gives you access to Illinois’ largest financial community. Contact Mike Walker at mike@rwwcompany.com.

Insight is the magazine of the Illinois CPA Society. Statements or articles of opinion appearing in Insight are not necessarily the views of the Illinois CPA Society. The materials and information contained within Insight are offered as information only and not as practice, financial, accounting, legal or other professional advice. Readers are strongly encouraged to consult with an appropriate professional advisor before acting on the information contained in this publication. It is Insight’s policy not to knowingly accept advertising that discriminates on the basis of race, religion, sex, age or origin. The Illinois CPA Society reserves the right to reject paid advertising that does not meet Insight’s qualifications or that may detract from its professional and ethical standards. The Illinois CPA Society does not necessarily endorse the non-Society resources, services or products that may appear or be referenced within Insight, and makes no representation or warranties about the products or services they may provide or their accuracy or claims. The Illinois CPA Society does not guarantee delivery dates for Insight. The Society disclaims all warranties, express or implied, and assumes no responsibility whatsoever for damages incurred as a result of delays in delivering Insight. Insight (ISSN1053-8542) is published four times a year, in spring, summer, fall, and winter, by the Illinois CPA Society, 550 W. Jackson,

capitolreport

Martin Green, ESQ Senior Vice President and Legislative Counsel, Illinois CPA Society @GreenMarty

Alternative Practice Structures: Opportunity and Responsibility

As alternative practice structures become commonplace in the accounting profession, CPAs and their firms must carefully consider their legal and professional obligations.

The emergence of private equity (PE) investment and influence in certified public accounting (CPA) firms is becoming more common— and for obvious reasons. For starters, PE investment provides needed liquidity for CPA firms to evolve, grow, and acquire advanced technology. In exchange for their capital infusions, CPA firms provide stable revenue streams to their PE backers, adding greater value to their holdings.

Of course, with PE’s growing presence in the profession, state and federal regulatory agencies must continue to evaluate these types of alternative practice structures to ensure compliance with current accounting practice standards and guidelines.

It’s important to remember that there are legal and professional responsibility requirements that CPAs and their firms need to consider when contemplating alternative practice structures.

UNDERSTANDING FIRM OWNERSHIP

Let’s first look to the Illinois Public Accounting Act for guidance on firm ownership. According to the act, 51% of a CPA firm’s owners must be CPAs who, regardless of licensure, must be active participants in the firm or affiliated entities and must comply with the act’s rules (225 ILCS 450/14.4).

The act’s administrative code also explains who qualifies as a member of the firm and defines majority ownership of the firm in terms of financial interest and voting rights of all partners, officers, shareholders, or members (68 IAC 1420.30). The administrative code also outlines unprofessional conduct as engaging in any business or occupation that impairs the objectivity of a licensee’s judgment in connection with the rendering of professional services (68 IAC 1420.200). This section of the code also references the AICPA Code of Professional Conduct, which means that any violation related to professional conduct can result in discipline by both the profession and the Illinois Department of Financial and Professional Regulation.

Additionally, the AICPA Code of Professional Conduct addresses the independence rule for CPAs in public practice, which requires CPAs to maintain independence when providing professional services—meaning, they must remain objective, unbiased, and free from conflicts of interest (ET §1.200). Notably, the code also recognizes alternative practice structures and includes guidance for determining whether CPAs are compliant with the independence rule (ET §1.220.020).

Other key legal and regulatory requirements to consider include:

• Only licensed firms can perform attest services.

• CPA firms must be (at least) majority owned by individual licensees and non-licensed owners must be actively engaged.

• CPAs must remain responsible for attest services.

• CPA firms must have clarity on which entity is providing services.

• Independence rules extend to the non-attest entity and potentially others.

PRESERVING INDEPENDENCE

The professional standards highlighted above provide guardrails to ensure independence in the attest services space. Generally, with the combination of an attest firm and a non-attest entity, the non-attest entity and the entities it controls should be independent of financial statement audit and review clients of the attest firm.

For instance, if a CPA firm that provides attest services is closely aligned with another public or private organization that provides professional services, the two entities usually have an administrative service agreement where the non-attest entity provides administrative services to the attest entity (i.e., the CPA firm). In this model, the CPA firm pays for the administrative services and remains responsible for all attest services and decisions.

However, with alternative practice structures forming through various means of mergers and acquisitions and investments, maintaining attest entity independence is becoming increasingly complicated. And in addition to preserving attest entity independence, there are significant downstream issues related to a PE firm’s clients interacting with the attest firm (ET §1.220.010).

With all this in mind, alternative practice structures typically exhibit the following attributes:

• The CPA firm and non-attest entity are legally separate entities with separate governance.

• All employees become employees of the non-attest entity.

• The CPA firm retains complete control over attest work, including acceptance of engagements, continuance decisions, and individuals working on attest engagements.

• The non-attest entity is part of independence monitoring. Others may potentially be included as well.

• Separate entity disclosures and disclaimers, in addition to marketing, engagement letters, and billing, are adopted.

ADDITIONAL GUIDANCE

Although alternative practice structures aren’t new, their ongoing evolution requires regulators and organizations to continuously evaluate their impact on accounting standards and rules. That said, only a few resources are available on the topic now. One resource I’ve found useful is the AICPA Professional Ethics Division’s March 2025 discussion memorandum, “Potential Revisions to the AICPA Code of Professional Conduct and Guidance Related to Independence in Alternative Practice Structures.” This is a good starting point for anyone needing more guidance on PE and alternative practice structures.

While PE presents opportunities for CPA firms, there are inherent risks if split-entity structure arrangements aren’t properly formed. As a profession, it’s paramount that we exercise due care with these alternative practice structures. If we’re not careful, compromising independence could erode the profession’s reputation and result in additional regulatory tensions.

This column is for information only and isn’t intended to serve as legal advice or a comprehensive guide for firm mergers or acquisitions.

100% CPA MEMBERSHIP PROGRAM

Thank you for your support of the Illinois CPA

Society and the profession.

We are pleased to recognize these accounting firms with 100% membership of their CPA staff.*

Arnold, Behrens, Nesbit, Gray PC

Baker Tilly US, LLP

Bansley Brescia & Co. PC

Barnes Givens & Barnes

BDO USA LLP

Benning Group LLC

Bernard A. Affetto & Co.

Borschnack, Pelletier & Co.

Catalano, Caboor & Co.

Cherry Bekaert

CLA (CliftonLarsonAllen LLP)

Coleman & Associates

Cray Kaiser

Crowe LLP

Cygan Hayes Ltd.

Deborah K. Hannan CPA

Dennis Rose & Associates PC

Desmond & Ahern

Detterbeck Johnson & Monsen

Duffner & Company PC

Dunbar, Breitweiser & Company LLP

EAG Chicago Northwest

Eck, Schafer & Punke LLP

EY US Ltd.

FSB&W

Gassensmith & Michalesko Ltd.

Gilbert Metzger & Madigan LLP

Gould & Pakter Associates LLC

Grant Thornton LLP

Gray Hunter Stenn LLP

Groskreutz Abraham Eshleman

& Gerretse LLC

GW & Associates PC

Hoffman & Tranel PC

Holland & Company CPAs PC

Honkamp Krueger & Co. PC

Insight CPAs & Financial PLLC

J.M. Abbott & Associates Ltd.

J.S. Richter Ltd.

John Kasperek Co. Inc.

John U. Smyth CPA LLC

Jonker & Associates

Katz LLC

KEB

KPMG LLP

Larry J. Wolfe Ltd.

Lauterbach & Amen LLP

Leaf Dahl & Company Ltd.

Legacy Professionals LLP

Lerman, Sweeney & Company LLP

Lipschultz, Levin & Gray LLC

Lucas Group

LWH CPAs

Mack & Associates PC

Mann Weitz & Associates

McCullough Rossi & Company Ltd.

McGreal & Company

Miller Cooper & Co. Ltd.

O’Neill & Gaspardo LLC

ORBA

Pasquesi Sheppard LLC

PBG Financial Services Ltd.

Plante Moran PLLC

PwC

Romolo & Associates LLC

RSM US LLP

RubinBrown LLP

Sassetti LLC

Selden Fox Ltd.

Sikich LLP

SKDO PC

The Charneske Group Ltd.

The Dolins Group Ltd.

Topel Forman LLC

West & Company LLC

Wipfli LLP

*minimum

From Service Line to Strategic Engine: Building a Leading Standalone CAS Practice

If you’re serious about growth, it’s time to stop treating CAS like a side offering and reimagine it as a strategic business model.

BY CHUCK TEEL, CPA

The truth is, CAS fundamentally contradicts the traditional CPA firm delivery model—it requires a different structure, different incentives, and a different mindset.

IN MANY CERTIFIED PUBLIC ACCOUNTING (CPA) FIRMS, you’ll see the same pattern: Client advisory services (CAS) are still widely positioned as transactional support offerings to clients. At these firms, teams are over-tasked, under-led, and structurally siloed from the strategic conversations that drive real client value. In most cases, this disconnect is structural, not technical. These firms have the talent to deliver strategic value, but they lack the organizational design to position CAS as the strategic engine it should be.

Today’s mid-market companies need day-to-day financial leadership—but most CAS practices are still just delivering them monthly reports. Yet these clients want someone to own the finance function, not just report on it. They need embedded partners who drive real-time strategic decisions—not external vendors who summarize what happened 30 days ago.

If your firm is serious about growth, it needs to stop treating CAS like a side offering. You’ll need to rebuild your model and reposition your team. Here are some strategies to get your CAS practice from service line to strategic engine.

CAS AS THE CORE, NOT THE COMPLEMENT

At my firm, we don’t treat CAS like a service line—it’s the core function of our firm. Here’s how we make it work.

We don’t:

• Mass-produce tax returns for individuals or businesses.

• Take on project-based or transactional work.

• Make tax most of our revenue.

• Take on tax-only engagements.

• Focus entirely on long-term, embedded financial leadership (not compliance cycles or ad hoc services).

• See our business as a financial operating partner—by design and daily execution.

• Lead operations and execute strategy.

• Engage exclusively with mid-market corporate clients—never startups—on minimum one-year terms.

• Require ownership of the controllership function, including month-end close and financial reporting, to ensure alignment and enable effective tax compliance.

• Attend board meetings.

• Manage finance, HR, and administrative functions.

This operating model wasn’t designed by accident. It was intentionally structured around my experience as a former chief financial officer (CFO), vice president of finance, and controller inside mid-market, global technology companies. The firm is modeled on how we operated finance from the inside.

Over the last eight years, this model has produced client relationships that operate more like strategic partnerships than typical CPA service-provider engagements.

The key in making this model successful required four fundamental shifts that most firms resist doing:

1. Structuring the firm around embedded partnership rather than external deliverables.

2. Hiring people with corporate experience (not just accountants).

3. Replacing hourly billing practices with monthly fixed-fee models that align with how companies pay internal teams and plan financially.

4. Leading clients’ operations with confidence, including taking positions on issues and not hiding behind neutrality.

5 STEPS TO STRATEGIC TRANSFORMATION

If you want to build a firm where CAS leads—not follows—consider starting with these five strategic steps.

1. Reposition CAS as a strategic capability. Rewrite your CAS positioning in proposals, websites, and sales decks using leadership language, not transactional compliance language. For example, replace language like “monthly financials” with “financial strategy and execution,” “bookkeeping services” with “embedded financial operations,” or “outsourced accounting” with “fractional CFO.” But in order for this change to be successful, you and your team need to live this new reality every day, in every meeting, and on every deliverable. Otherwise, if you position strategically but deliver transactionally, clients will see through it immediately. You have to walk the talk— and that means retraining your team and restructuring your model to match.

2. Give CAS its own leadership track. CAS shouldn’t roll up under tax, audit, or consulting. It needs its own leader—ideally a partner who’s served as a CFO or controller inside a company. It should be someone who understands the difference between reporting results and driving them.

3. Enhance integration through communication. Don’t just deliver documents to clients—stay in the conversation. Real-time finance happens through live, ongoing communication. To help with this, consider using chat tools like Microsoft Teams, Slack, or Zoom to embed inside a client’s operations. This level of integration transforms the relationship from vendor-client to strategic partnership.

4. Design for embedded execution, not deliverables. Move to monthly fixed-fees based on process ownership, access, velocity, and impact—not on volume of tasks. Package your services around what you solve, not what you send. Remember, your clients are paying for embedded financial leadership and operational execution. They’re not buying hours or reports— they’re buying outcomes and access to people who’ve run companies. Overall, this pricing model helps align your incentives with your clients’ successes and eliminates the scope creep that destroys CAS profitability.

5. Recast the internal narrative. Your CAS team isn’t the “back office.” They’re the financial operating layer for your clients. Hold a team meeting and have everyone say it clearly: “We don’t deliver tasks—we deliver control. We’re not bookkeepers—we’re operators.” This mindset shift changes everything—from how team members approach client conversations to how they think about problem solving and positioning their role in strategic discussions. More importantly, when your team sees themselves as operators, clients start treating them that way.

INVISIBILITY IS THE REAL RISK, NOT UNDERPERFORMANCE

The real risk in keeping CAS as a side offering instead of a standalone practice isn’t that it underperforms, it’s that it stays invisible. When your best operators are trapped inside a compliance frame, you don’t just limit their impact—you lose them. Worse, you let others reframe the category while you’re still selling bank reconciliations and month-end closes.

If CAS lives under tax, it inherits tax culture: reactive, deadline bound, and margin constrained. The work becomes about meeting filing deadlines, not driving business outcomes. The conversation becomes about compliance requirements, not strategic opportunities. The relationship becomes transactional because the structure demands it.

What’s more, if CAS isn’t led by someone who’s lived in the seat as a CFO, controller, or operator inside a company, the practice will never speak the client’s language. You can’t lead strategic finance conversations from a compliance mindset. You can’t build embedded partnerships when your team has never owned profit and loss responsibility or managed cross-functional initiatives.

While most firms say they want to offer advisory services, their organizational charts, pricing models, and internal culture signal “bookkeeping.”

As traditional firms debate how to add CAS offerings, others are making it their core business and positioning it as a strategic engine. The question today isn’t whether CAS will evolve into embedded financial leadership. The question is whether you’ll lead that evolution or watch it happen from the sidelines.

Chuck Teel, CPA, is the founder and CEO of Teel+Co Strategists and CPAs.

Does Blockchain Technology Use Increase Audit Risks?

As blockchain technology grows, new research examines whether firms that use it are setting themselves up for greater audit risk.

BY JOSHUA HERBOLD, PH.D., CPA

Here are a few risks firms should be aware of before implementing blockchain technology:

• Existing accounting, supply chain, and enterprise resource planning systems may not be designed to handle the technology.

IF YOU SPEND ANY TIME reading business news, it’s nearly impossible to avoid headlines that tout the benefits of blockchain technology. Practical, working blockchain networks have been around since the introduction of Bitcoin in 2009, and many companies are using it to improve various aspects of their operations. After all, blockchain technology promises transparency, speed, and accuracy—what accountant wouldn’t appreciate more of those things?

Yet adopting any new technology comes with risks. While blockchain may be the technology of the future, companies implementing it must deal with the operational headaches that accompany this type of innovation.

• Staff may lack expertise in blockchain features, like smart contracts, key management, or tokens.

• Blockchain and cryptocurrency laws and regulations vary greatly across jurisdictions and are evolving rapidly.

Auditors have also seemed to notice the increased risk that blockchain introduces. In recently published research, “Opportunities or Challenges? Audit Risk and Blockchain Disclosures in 10-K Filings,” DePaul University Professor Tawei (David) Wang, Ph.D., MBA, and his co-authors Feiqi (Freddy) Huang, Ph.D., (Pace University), and Ju-Chun Yen, Ph.D., (National Central University), examined the

relationship between audit clients’ blockchain activities (including cryptocurrency related) and audit fees.

THE IMPACT OF BLOCKCHAIN ACTIVITIES ON AUDIT RISK

“We had a discussion with five professionals (both external and internal auditors) about auditing clients with blockchain activities, including cryptocurrency activities. The discussion was also about current adoption challenges and different risks or factors that may affect auditors’ assessment of risks,” Wang notes.

That discussion sparked an interesting insight. As noted in their research paper, “all five practitioners suggested that blockchain activities are likely to increase audit risk.” The reasons mentioned for this included the lack of official guidelines, immature technology, smart contract design, high fluctuation in the valuation of crypto assets, proof of ownership, inconsistent regulation across countries, smart contract management, digital wallet verification, and other cybersecurity issues.

These conversations provided the researchers with anecdotal evidence that the practical issues involved in adopting blockchain technology are a big concern for companies and auditors.

“The downside to implementing blockchain is that there’s an increase in audit risk due to the increase in inherent and control risks,” Wang explains. “Because of the features of blockchain activities, there’s also a need to better understand it when assessing the risks.”

COMPARING DISCLOSURE USE

To examine the impact of any perceived increase in audit risk, the researchers examined 10-K filings from 2013 to 2020 and used relevant keywords to separate companies into three groups: those that were currently implementing blockchain activities, those that were planning to do so, and those that made no mention of blockchain activities.

According to the data, the number of companies disclosing blockchain activities in their 10-K filings grew from three in 2013 to 72 in 2020 (there were no mentions of the relevant keywords prior to 2013). The researchers’ paper also notes that “blockchain activity disclosures are heavily concentrated in the business equipment industry (i.e., computers, software, and electronic equipment, 64.6 percent); followed by other industries (i.e., mines, construction, building management, transportation, hotels, bus services, and entertainment, 12.6 percent); and wholesale, retail, and services (8.7 percent).”

After controlling for factors known to affect audit fees (e.g., company size, market-to-book value of equity, return on assets, etc.), the researchers compared companies disclosing blockchain activities to those without such disclosures. Their research findings were exactly in line with the anecdotal evidence from their interviews: “In terms of economic significance, we find that audit fees are about 9.2 percent, or $89,850 higher for firms disclosing blockchain activities in 10-Ks.” The increase in audit fees was even higher for companies with greater involvement in blockchain activities, providing further support for the notion that increased blockchain activities would necessitate increased effort from external auditors.

Prior research into blockchain disclosures in United States Securities and Exchange Commission filings shows that the content of these disclosures can signal different types and levels of engagement with blockchain technologies. Knowing this, Wang and his co-authors examined whether there was a difference in audit fees for companies currently implementing blockchain versus those

that were planning to do so. As noted in the researchers’ paper, “For companies that plan to engage in blockchain activities, the business risk may be lower than for those already implementing blockchain activities; the former may be confronted by the risk of failing to keep pace with new developments in the technology, whereas the latter may face a higher risk associated with blockchain systems and security.”

Once again, after controlling for factors known to affect audit fees, the researchers’ expectations were supported. Comparing companies with blockchain disclosures to those without, the data showed that audit fees were higher only for firm-years disclosing currently implemented blockchain activities and not firm-years disclosing planned or future blockchain activities. Similar to the first part of the study, this result was even stronger for companies with greater (current) involvement in blockchain activities. The researchers concluded that the higher audit fees in the overall data set were primarily driven by clients disclosing current engagement in high-intensity blockchain activities.

The researchers also found evidence that the increased audit fees weren’t driven by internal control issues. As the researchers noted, “clients engaging in blockchain activities or planning to do so are not more likely to disclose material weaknesses in internal controls over financial reporting.” This suggests that any perceived increase in audit risk is primarily driven by a rise in the perceived inherent risk of blockchain activities rather than an increase in perceived control risk.

Finally, the researchers explored the relationship between blockchain disclosures, audit fees, and auditor and client characteristics. They found that the greatest audit fee increases occurred when clients disclosed their current blockchain activities and whose auditors weren’t part of a Big Four firm, had a smaller office, had short audit tenure, or lacked industry expertise.

ARE FIRMS AT RISK?

Wang says that the takeaway from these findings for practitioners is clear: “Clients’ currently implemented blockchain activities are related to higher inherent risks. This is a bigger concern when the auditors don’t have enough resources or expertise to fully understand the implementation.”

Since emerging technologies may affect future audits in so many different ways, including additional risk assessments or even helping auditors perform their tasks differently, Wang notes that he and his colleagues have more research in progress on this front: “Our new studies have been investigating how artificial intelligence may support auditors in making better judgments and in transferring implicit knowledge.”

While the benefits of new technologies like blockchain are often touted (and realized), a complete analysis needs to include all the relevant costs. Research like this study’s shows that audit fee increases may need to be included in these costs, as these fee increases are even more pronounced when auditors lack technical expertise, industry specialization, or firm resources.

Overall, as blockchain adoption grows, both companies and auditors must prepare for the operational complexity and demands that come with it.

Joshua Herbold, Ph.D., CPA, is a teaching professor of accountancy and associate head in the Gies College of Business at the University of Illinois Urbana-Champaign and sits on the Illinois CPA Society Board of Directors.

HIRING & RETENTION

Beyond Summer Help: Creating Impactful Internship Programs

When designed with purpose, internship programs do more than provide seasonal help—they create a sustainable pipeline of future firm leaders.

BY CAROLYN TANG KMET

director of career and professional development at the University of Illinois’ Gies College of Business.

A WELL-STRUCTURED INTERNSHIP

PROGRAM does more than provide short-term help for a certified public accounting (CPA) firm— it serves as a long-term strategy for building relationships with students early, reducing recruiting costs, and opening doors to potential full-time hires.

“A strong internship program creates real value both now and down the line,” says Kelly McClellan, owner of INMITTO Consulting LLC and senior associate director and program manager of MBA Career Development at the University of Minnesota’s Carlson School of Management. “It’s a great way to spot top talent early and see how someone works over several weeks, not just in a single interview.”

McClellan adds positive internship experiences can enhance a firm’s reputation on campus, helping to attract future candidates and potentially fuel a pipeline of talent growth.

ATTRACTING THE NEXT GENERATION OF TALENT

“Today’s college students are looking for more than resume builders—they want internships that offer real learning, a sense of belonging, and a clear path forward,” stresses Kristina Wright, senior

Adding to that thought, because students have so many options available to them, Andy Kamphuis, CPA, shareholder and managing director of Vrakas CPAs + Advisors, says it’s critical that internships offer a unique experience. His firm, for example, offers a dual internship model that exposes students to both audit and tax work during the peak spring season. This affords the firm’s interns opendoor access to shareholders, a chance to work on site with clients, participate in a mentorship program, and contribute to a range of projects across clients of varying sizes and complexities.

What’s more, “this generation wants and needs caring leadership,” Kamphuis notes. “Leaders should cultivate a clear understanding of what success looks like for an intern. They should hold regular one-on-one meetings, offer timely praise and constructive feedback, make an effort to build a relationship, and be genuinely invested in the intern’s growth. After all, the most common complaints we hear when speaking to students about their internship experiences are that their leaders were either too new or too busy for them.”

Kamphuis also notes the shift in student preferences in recent years, particularly in favor of summer internships and in-person experiences. In his experience, many students begin looking for

internships as early as their freshman year of college, and some are even starting in high school.

CULTURE IS KEY

While gaining real-world experience is what matters most, Wright says students also consider flexibility and workplace culture when choosing internships: “While students appreciate the option to work remotely, they also value in-person experiences that allow them to build relationships, connect with mentors, and feel part of the company culture. They want to feel like they belong and that the company sees them as future colleagues, not just temporary help.”

Plante Moran, a national accounting and consulting firm, is widely recognized for its inclusive and supportive workplace culture. Tom Kinder, CPA, managing partner of the firm’s Chicago office, notes that this plays a key role in helping interns feel welcomed and quickly integrated into the team.

“Our interns are immersed in our ‘we care’ culture, receiving the same level of support and responsibility as new staff,” Kinder says. “We surround them with mentors and team partners who are genuinely invested in their growth.”

Kinder explains that this is a priority at Plante Moran because today’s accounting interns want more than technical training—they want to be in a place where they can grow and be supported.

“At Plante Moran, we build authentic relationships with our interns through one-on-one coffee chats, team lunches, and simply making time to listen,” Kinder says. “That sense of belonging creates a lasting impression.”

Further, Kamphuis shares that his firm’s culture emphasizes realtime feedback and fosters a “care-and-teach environment.” At his firm, interns receive guidance from multiple sources, including their managers and, in some cases, through formal class-style sessions with other interns.

FROM STUDENT TO STAFF: CREATING A SEAMLESS TRANSITION

One could argue that the mark of a successful internship program is ultimately determined by whether or not an intern chooses to keep the relationship with the firm long term—in other words, as a full-time employee.

Public accounting and consulting firm Warady & Davis LLP offers an audit, accounting, and tax internship program that’s highly regarded in the industry. In fact, over 90% of interns who are offered full-time roles accept and join the firm after graduation.

Leslie Flinn, the firm’s director of growth, explains that one of the reasons the firm sees such a successful hiring rate is because they expend the same effort hiring interns as they do with hiring full-time employees, noting that all interns are hired with the goal of extending a permanent offer at the conclusion of the experience: “We view interns as potential long-term team members and invest in them right from the beginning of the internship.”

Flinn also notes that it’s highly unusual for the firm to hire externally for roles below the five-year experience mark, as those positions are almost always filled internally: “Our primary objective is to grow talent from within and give opportunities to our existing team members whenever possible.”

One way that Warady & Davis does this is by ensuring that interns do the same work as first-year staff accountants. “We treat them just as if they’ve already graduated and passed their CPA exam,” Flinn says.

One component of the Warady & Davis program is a blended, fullscope internship that includes exposure to both audit and tax. Flinn says this structure is one of their most popular offerings because many times they’re talking to candidates in their sophomore or junior years, and at those stages, most of these students haven’t yet taken audit or tax classes.

“We feel that exposure to both areas creates stronger accountants,” Flinn says. “We also carefully tailor this internship experience to give interns exposure to different teams and industries, and they also get the opportunity to see a full scope engagement, from the initial audit to planning meetings, on-site field work, preparation of the tax return, and the final deliverables to the client.”

Flinn highlights feedback from interns has remained remarkably consistent over the last 25 years. Interns often report being given significantly more responsibility than they expected and more than their peers in other programs. They also highlight the breadth of experience they receive, noting that rather than being limited to one component of an audit, such as cash or receivables, they gain exposure to a wide range of tasks and client work.

In today’s competitive recruiting landscape, internship programs are more than an industry obligation, they’re a strategic tool firms can leverage to build a proprietary talent pipeline. When intentionally designed, internship programs provide students with meaningful, real-world experience, which enables firms to identify, develop, and create a pipeline of future firm leaders.

Carolyn Tang Kmet is a clinical associate professor at Northwestern University and a frequent Insight contributor.

Recruiting Talent From Alternative Sources

Some organizations are getting creative and tapping into alternative sources to find new accounting and finance talent. Here’s how you can fill critical roles with non-traditional candidates.

BY NATALIE ROONEY

THE ACCOUNTING AND FINANCE HIRING PROCESS has followed the same model for decades, leaning heavily on college career fairs to recruit new graduates. But with a declining number of accounting majors in recent years, some organizations have started looking for more creative avenues to fill empty positions.

“We continue to have such a need for talent in the accounting profession,” notes Meghann Cefaratti, Ph.D., CIA, CRMA, Deloitte Foundation Professor of Accountancy at Northern Illinois University.

She suggests that non-traditional candidate pools may be the answer to the profession’s hiring challenges: “There’s a growing recognition of the benefits that come from hiring individuals from diverse experiences and backgrounds. We can see how they complement groups.”

Here, accounting and finance professionals offer insight into three alternative recruitment sources and explain why they may be the key to fulfilling your talent needs.

RELYING ON RETIREES

One month after retiring from Wipfli, Allen Bolnick, CPA, co-founder of Bolnick Tax Group LLC, realized he didn’t actually want to golf every day. He approached his son with a business proposition: launching an individual income tax practice.

Bolnick knew he had the experience to set up a tax practice. The challenge, however, was finding the right people to do the work. He decided on an unconventional approach: employing other retired firm partners who also weren’t ready to stop working entirely.

“A lot of people are being forced to retire at 62, 65, or 70,” Bolnick says. “But some of them still want to be in the game—not for the money, but because they enjoy it.”

Bolnick reached out to all the retired, or about to be retired, partners he knew with an offer: choose your clients, set your own hours, and get paid based on a model acceptable to you. “The idea was that they’d always have some work to do, a platform to do it on without spending their own money, and they could work at their leisure.”

His staffing concept was a hit. Now in its fourth year, the firm has doubled the number of tax returns it handles every year, and Bolnick’s remote team charges through busy season with everyone operating from their favorite warm weather retirement locales. As an added benefit, these retirees bring a specialized knowledge base to the table, and they’re willing to share it, mentoring younger certified public accountants (CPAs) and others new to tax preparation.

Though, Bolnick doesn’t limit his potential recruits to retirees. In addition to experienced stay-at-home CPA parents who would like to return to the workforce, Bolnick says the firm also welcomes nonaccountants without any tax experience: “We’ll invest in training opportunities for the right people.”

Bolnick says this staffing model succeeds because everyone is working by choice and from where they want to be. Although there can be challenges with finding enough administrative team members to manage the workflow, which rolls en masse during the tax filing season, so far, he calls the “problem” manageable, and the firm continues to accept new clients.

THE BUSINESS CASE FOR SECOND CHANCE HIRING

In 2013, Jeffrey Korzenik, chief economist for Fifth Third Bank, took a deep dive into the looming global labor shortage to find out what was driving it and how to address it.

“Our labor force participation rate was falling dramatically,” he says. “I knew we had to look at all options to find solutions.”

Korzenik discovered that many organizations were realizing success from an unlikely recruitment source: employing individuals with criminal records.

Nearly 80 million Americans, or about one-third of the total adult population in the United States, are living with some kind of criminal record. For more than 19 million Americans, that conviction has led to a felony on their permanent record.

“It represents an enormously underutilized labor resource,” Korzenik wrote in his 2021 book, “Untapped Talent.”

“Initially, people assumed I was talking about a social justice crusade,” he says. “But this was a business proposition—a practical matter.”

Those critical of Korzenik’s book and overall recruitment concept turned into believers once they heard him present his case in person. For example, while he was speaking to the Federal Reserve

Bank of Chicago, one economist noted how audience members started off listening to his speech with their arms crossed, but by the time Korzenik finished, attendees were leaning forward in their seats. “You could read their body language. They understood this is an economic opportunity,” Korzenik says.

The key to hiring from this population is understanding that criminal records come in all shapes and sizes. “Young people don’t always have the guardrails of parents and families, and they make mistakes. Most criminal records are acquired when someone was young,” Korzenik stresses. “If someone was in possession of marijuana 30 years ago, it shouldn’t stand in the way of licensing today.”

Korzenik doesn’t discount the importance of licensing regulatory authorities and appropriate restrictions. For instance, if financial fraud is involved, common sense dictates that an individual might not be a good fit for certain roles. But he notes that someone who had a DUI or a minor drug conviction many decades ago shouldn’t be automatically excluded from a second chance.

Overall, Korzenik says the number-one reason to consider second chance hiring is to help meet the goal of hiring the best person for a job—and he stresses that people who’ve made mistakes, reflected on those mistakes, and have intentionally chosen to live a positive life of contribution and meaning, tend to be great employees.

He also notes that individuals with criminal records tend to be very driven and exhibit higher levels of retention and engagement: “They’re determined to prove they’re more than their own worst mistake—grit and resiliency define this group.”

Korzenik emphasizes that second chance hiring requires some time investment from employers, as these candidates might need a little extra help filling in skills gaps: “Typically, this population hasn’t had role models or coaching. They’re often missing soft skills and knowledge that those with traditional family and education backgrounds take for granted.”

Yet, despite the extra commitment, Korzenik asserts the process is worth it: “They’re people who haven’t had the opportunity to learn, and they’re eager to. They’re highly coachable, but employers need to invest in the process. These aren’t cookie-cutter employees.”

As such, Korzenik offers some tips for organizations interested in second chance hiring:

• Educate yourself on what’s possible with second chance hiring.

• Find and reach out to employers who are known for hiring second-chance candidates.

• Seek out nonprofit organizations that help individuals transition to reentry.

• Reach out to local probation and parole officers to make connections. “Communicate with them as a potential partner,” he says. “Ask if they can help find the talent you need. Remember, this is a business proposition. Make sure you’re on the same page for what success looks like.”

• Review and remove barriers in your hiring process. If your policy states you’ll “never” hire anyone with a criminal record, it might be too restrictive and be preventing you from connecting with qualified candidates.

Some businesses are already on board. Nearly 10% of JPMorganChase’s U.S. hires over the past five years had a prior record with no bearing on their roles.

Ultimately, whether people know it or not, Korzenik says many of us are interacting with people who have criminal records every day: “They’re our neighbors, firefighters, mechanics, medical assistants, and even our doctors. We can hire these people in an intelligent and thoughtful way.”

MILITARY VETERANS: A WEALTH OF EXPERIENCE

Bank of America (BofA) has been developing a stream of qualified candidates through its Military Acquisitions Team led by Lindsey Streeter, senior vice president of Global Military Affairs.

A U.S. military veteran himself, Streeter retired from his 31-year career in the Army as a highly decorated command sergeant major. He landed at BofA after a friend suggested the bank would be a good fit.

Streeter says vets bring valuable skill sets to civilian roles, including discipline, leadership, teamwork, problem solving, and an ability to think globally and act locally: “It makes them great candidates for many roles.”

Teamwork, Streeter says, is particularly valued: “The military’s collaborative thought process cascades down. When we lift them [veterans] into our ranks, it’s a natural fit.”

BofA’s support for its veteran employees doesn’t end with job placement. Additional services include specialized onboarding and mentoring with a tenured veteran, development programs to identify emerging talent and advancement opportunities, support for spouses and partners, and confidential counseling.

Streeter notes that being “veteran friendly” and open to hiring vets doesn’t automatically translate to being “veteran ready.” There are some considerations if you want to attract—and keep—these valuable candidates. “You may have a teammate in the National Guard or Reserves who may be called up,” Streeter points out. “What are you going to do as a company to support that?”

He also emphasizes the importance of the onboarding process for these candidates, as going from the military to the office may be a learning curve for some individuals: “It may be as simple as helping them know what to wear to the office because they’ve been wearing a uniform every day.”

To fill their veteran talent pipeline, BofA partners with national organizations, such as the U.S. Chamber of Commerce and Hiring Our Heroes. They also recruit from military installations where military personnel have the skill sets the bank is seeking.

HONORING DIFFERENT CAREER PATHS AND EXPERIENCES

Cefaratti says it’s important for accounting and finance teams considering recruiting from alternative sources to know that they’ll likely encounter candidates who don’t have a traditional education. Some may not have a high school diploma or college degree, creating an opportunity for organizations to help candidates qualify for a job through the education or certification process. “They can still contribute in their role,” Cefaratti adds.

Streeter encourages hiring managers to look beyond the hard skills and instead look for the capacity to develop those skills. “Gauge their capacity for a role,” Streeter says. “With military veterans, for instance, you’re getting an individual who’ll beat everyone to work and stay until the end—those qualities can’t be captured on a resume.”

When Korzenik presents second chance hiring as just one of the many opportunities to expand the nation’s labor pool, he knows it can be a big reach for organizations. The good news is, if you can figure out how to work with someone’s criminal record, figuring out all of the other areas of opportunity will be a cakewalk. As he stresses, “Whether it’s older workers reentering the workforce, parents returning after raising children, refugees, asylum seekers, or English as a second language learners—the accounting profession needs all of these talent pools.”

Natalie Rooney is a freelance writer based in Eagle, Colo. A former vice president of communications for the Ohio Society of CPAs, she has been writing for state CPA societies for more than 20 years.

Mentorship Makeover

Designing Programs With Impact

Forward-thinking CPA ﬁrms are going beyond one-size-ﬁts-all mentoring approaches to better engage, retain, and grow their talent. Here are some strategies that can make an impact.

BY CLARE FITZGERALD

Agood mentor can be hard to ﬁnd. But the impact of effective mentoring on individual career growth and an organization’s strategic objectives can be priceless.

people are invited to help with the growth journey of more senior colleagues, the ﬁrm demonstrates that they’re valued for the different experiences they bring.”

EXPLORE

www.icpas.org/ readiness

Recent research supports this declarative statement, highlighting the benefits that mentorship can bring to an organization. For instance, survey findings from the 2025 Insight Special Feature, “The Readiness Divide: How Next-Gen Accounting Talent Measures Up,” found that both early-career professionals and managers nearly equally believe mentorship is an important tool for skill development, indicating that it might be the key to closing the skills gap that employers have consistently flagged. Additionally, in a 2025 Society for Human Resource Management report, “The Price of Success: Navigating the Tradeoffs That Shape Career Growth,” more than half of workers said they feel strongly motivated to persevere through career adversity when they have a mentor or sponsor.

Carla McCall, CPA, CGMA, managing partner at AAFCPAs, an accounting and consulting ﬁrm based in Westborough, Mass., says successful mentoring and coaching programs have the potential to help employees overcome adversity and maximize their engagement and also build community and bridge gaps between leaders and more junior staff.

Although mentors have long played a role in developing and retaining talent at certified public accounting (CPA) firms, mentorship programs often fall short in terms of participation, reach, accountability, and management. That’s why growth-minded firms are reimagining their programs and exploring new ways to support employees at all stages of their careers.

New Approaches to Mentoring

According to Jenn Labin, author of “Mentoring Programs That Work” and coach at Rocket Brain Coaching in Sykesville, Md., traditional one-on-one mentorship programs yield effective results, but incorporating elements from other models can help ﬁrms expand their reach to varied employee groups and provide alternatives to one-size-ﬁts-all frameworks. Here are a few to consider.

Reverse Mentoring

One alternative model is reverse mentoring, where junior employees serve as mentors to more senior leaders. While not a new approach, it’s become more popular in recent years, especially with organizations that want to be known for emphasizing learning opportunities.

Eileen Linnabery, Ph.D., a partner and executive coach at Chicagobased Vantage Leadership Consulting, says that reverse mentoring can be effective for organizations that want to make it clear to their employees that everyone is expected to be contemporary in knowledge: “A reverse mentorship program demonstrates the expectation that everyone should be constantly learning and shows that leaders are taking time to learn from more junior or inexperienced staff.”

The reverse mentorship model is also popular because the beneﬁts go both ways. “Junior employees can gain insight into how leaders think and learn what’s important to them, as well as obtain a broader sense of what it means to lead within the organization,” Labin says. “On the other side, leaders can gain exposure to new ways of thinking and get a better sense of the experiences of their junior employees.”

Labin also notes that reverse mentoring can be a powerful tool for engaging with underrepresented populations: “When

Group Mentoring

Oftentimes, scale can be a challenge for ﬁrms that want to build inclusive mentoring programs. One way to get around this barrier is to offer group mentoring, a time-effective way to expand the reach of a mentoring program beyond formal, one-on-one meetings.

“You can’t ask your partners to mentor everyone,” Linnabery cautions. “Instead, take a precious few of the most senior folks and build strategic programs that make good use of their time.”

Linnabery suggests having leaders host quarterly ﬁreside chats or other sessions that are open to the entire mentorship program: “That way everyone gets to ask questions and hear stories in an intimate group setting and have exposure to the leaders.”

Some CPA ﬁrms are also using group mentoring programs to support team members through the CPA exam process. For example, McCall says that AAFCPAs’ Zip2CPA Program, designed to help accounting professionals accelerate the process of earning their CPA credential, is led by an adjunct professor who provides group coaching and study sessions.

Peer Mentoring

Another approach for supporting employees is through peer mentoring, where individuals of similar ages or experience levels support each other’s growth and development.

“Every single person has something to offer to other people. Even if it’s a person’s ﬁrst day in the professional workforce, there’s something in their experience and expertise that others can learn from,” Labin says.

One beneﬁt to this approach is that it can ﬁll in the gaps that come with relationship-based learning without depleting an organization’s mentor pool.

To make use of this mentoring model, Linnabery suggests that when ﬁrms bring people together for trainings, they set the expectation that everyone becomes a peer mentor. After holding a group training, for example, she suggests challenging pairs and trios to carry the lessons forward.

Executive Coaching

For some ﬁrms, a limited mentor pool can be the biggest obstacle to creating successful programs. After all, not everyone wants to be a mentor and not everyone has a knack for mentoring.

“It can be really hard to get folks to want to act as a mentor,” Linnabery says. “Being asked to spend six to 12 months with someone can feel like quite a chore. And just because someone volunteered to be a mentor doesn’t mean they’re good at it.”

McCall agrees—especially when it comes to accountants: “We’re not always good at coaching. We ﬁt it in when we have time. Client crises will always take priority. Accountants are good at client work, but we don’t always know how to read signs and body language and get at the root of retention problems.”

That’s where executive coaches can come in. Linnabery says the idea of hiring executive coaches is increasingly gaining traction, especially for leadership development and career counseling. Her ﬁrm, for example, offers a career counseling framework that helps executives maximize their potential and satisfaction with work, while also meeting the needs of the market, industry, employers, and customers.

Some organizations also are hiring in-house executive coaches to provide customized and conﬁdential career support. McCall notes that AAFCPAs has several internal executive coaches that everyone in the ﬁrm can engage with who are fully dedicated to that role: “We needed our coaches to be immersed in our culture and have 100% focus on our people.”

AAFCPAs’ coaches provide a range of ongoing support and guidance, such as helping employees improve their communication skills, deliver critical feedback, navigate difficult conversations, set goals, and chart their career paths. “Our coaches have helped people have candid conversations with others and move around in the ﬁrm,” McCall says. “We’ve kept talent because of them.”

Although providing access to executive and leadership coaching can come with a high price tag, Labin says more ﬁrms are recognizing the positive impact of these investments: “The resulting behavior changes and growth we see in employees are so much stronger and more sustainable than any other development tool. It builds the entire skill set and helps people get to where they want to go. The investment in the employee creates so much engagement for them and makes them a stronger player, so the return on that investment just keeps growing.”

Notably, artiﬁcial intelligence (AI) may expand affordable access to coaching. Though, as Labin warns, the capabilities may be limited, and organizations would need to consider the associated risks and regulations that come with using it.

“There’s certainly a race to ﬁnd AI coaches and tools. What currently exists can be helpful in some areas, but I don’t see it replacing human coaches or mentors and the people that oversee the processes and experiences to make sure they’re valuable for employees,” Labin says. “I think there’s a role for the technology in the coaching and mentoring space, but not as a replacement for relationship-based learning.”

Tips for Deploying Successful Mentorship Programs

Regardless of the mentorship model implemented (or mix of models), ﬁrms can boost the impact of their programs by keeping these ﬁve best practices in mind.

1. Build for the Program’s

Purpose

Labin recommends identifying the intention ﬁrst and then choosing the shape of the program based on its purpose. “If the goal is to expand networks or build community, for example, group mentoring can be an efficient way to achieve that purpose with lower administration needs,” she explains. “For onboarding or leadership development, where a lot goes on behind the scenes for the mental and emotional state of the people participating, then a one-on-one format would be important.”

2. Set Clear Expectations

To avoid uncertainty about what a mentor should or shouldn’t do, organizations need to help mentors feel prepared and conﬁdent in their roles. As Linnabery notes, even excellent mentors need to be trained on the ﬁrm’s expectations for the relationships.

Labin suggests that communication and information sharing with everyone involved can help ease hesitancy, prevent confusion, and build psychological safety within the relationships: “I’m a big fan of having one resource and one launch event to share the same information with everybody, because then mentees have total clarity on what mentors are expected to do and vice versa.”

3. Make It a Win-Win

Mentorship program administrators shouldn’t be afraid to ask someone to mentor.

“Sometimes there’s a fear that people won’t mentor if they’re being asked to do too much,” Linnabery notes. “But a progressive approach to solving that problem is to make sure there’s something in it for them as mentors.”

She says ﬁrms should encourage all participants to identify strong goals and what they want to get out of the relationship: “Maybe the mentor wants to better understand their up-andcoming talent so they can grow their teams better, while the mentee wants to learn a new process, system, or approach to doing the work.”

4. Find a Balance of Structure and Freedom

According to Linnabery, the best mentoring programs are those that create natural engagement: “Implementing too many reporting requirements creates too many tasks. But at the same time, you don’t want to leave people to their own devices, as they may not know where to begin.”

Conversation guides and other tools can help create the right balance. In a one-to-one model, for example, guides can provide a starting point for conversations, such as how to get a promotion, overcome a disagreement, or respond to critical feedback. “It’s important to provide some tools and structure to make sure everyone’s getting the most out of their conversations, but also allow some freedom and choice,” Linnabery stresses.

She also advises against overcomplicating mentor-mentee matching: “Don’t create extensive formulas for matching people. You don’t need people to be colleagues for life. Random matches are just as likely to be successful as a highly prescriptive match.”

Labin also recommends considering the maturity of the mentorship program. “If mentoring is already a well-established practice and has high participation, then the program may not need as much structure,” she explains. “If there’s more work to be done to get mentoring adopted throughout the organization and seen as a key part of the talent strategy, then more structure is better.” But she adds the caveat that structure shouldn’t create a lot of unnecessary hassle for participants, and decisions shouldn’t be made for the purpose of checking a box.

5. Get Creative

As organizations look for opportunities to customize their mentorship programs, Linnabery says they should also have fun with the process: “Think about ways you can incorporate your company culture into your mentorship programs—be playful with it.” As an example, Linnabery says one of her clients created a theme around a leader’s hobby.

If your ﬁrm doesn’t follow any of these best practices, perhaps it’s time for a mentorship makeover. After all, when organizations commit to moving beyond the traditional, one-size-ﬁts-all approach to mentorship and instead create programs with real purpose and intention, they don’t just support individual development, they build a foundation for long-term organizational growth.

Clare Fitzgerald is a freelance writer covering the accounting, finance, and insurance industries.

Independence at Should Your Firm

a Crossroads Take the Private Equity Path?

With growth capital on the table and cultural costs in the balance, accounting ﬁrm leaders face a high-stakes decision—should they take the private equity deal or remain independent?

BY CHRIS CAMARA

As private equity (PE) continues to reshape the accounting profession, certiﬁed public accounting (CPA) ﬁrm leaders are grappling with a critical question: Can they remain independent and still compete?

PE has moved from the fringes of the accounting profession to center stage. Since 2021, roughly two dozen of the 100 largest accounting firms in the United States have either sold an ownership stake to PE investors or been acquired by a firm that’s done so. Once wary of external ownership, accounting firms are now actively courting or being courted by investors. The country’s top 30 firms in particular have embraced PE to fund rapid growth, invest in technology, and improve operations.

“My observation is high performers do really well in the PE world,” says Allan Koltin, CPA, CGMA, CEO of Koltin Consulting Group in Chicago and a top advisor to CPA ﬁrms. “But the downside to that is low performers don’t do so well.”

Here, ﬁrm managing partners and consultants reveal strong arguments for and against taking the PE path.

Investment, Speed, and Scale

PE can solve an immediate problem: The need for capital. Injecting more capital into a ﬁrm can accelerate mergers, upgrade technology, and pay for unfunded deferred compensation programs. Bob Lewis, MBA, president of The Visionary Group in Palatine, Ill., estimates 85% of ﬁrms are in that category. With valuations being three or even four times greater than before, retiring partners can also exit with sizable payouts.

Another attraction is speed, says Matt Rampe, a partner with consulting ﬁrm Rosenberg Associates. PE-backed ﬁrms move faster into acquisitions and advisory services than traditional partnerships.

Rob Brown, a U.K.-based host of multiple accounting podcasts and co-founder of the Accounting Inﬂuencers network, says PE also brings experienced professional support: “Sometimes accountants aren’t entrepreneurs, so PE brings in a lot of people with operational expertise that have run and scaled businesses.”

A recent PE survey by INSIDE Public Accounting (IPA) shows that PE-backed firms significantly outpace their non-PE counterparts in total growth, posting an impressive 38.4% increase compared to just 11.7%. Even excluding mergers and acquisitions, PE firms still lead with 16% organic growth versus 10.3% for non-PE firms.

Culture Clashes, Lost Control, and Client Concerns

Of course, PE doesn’t come without tradeoffs—and some of them are signiﬁcant.

Brown notes that moving decision making from a partner group to private investors with growth targets is a leap some ﬁrms aren’t willing to make: “PE provides fuel, but it also changes who’s driving the organization. Firms need to ask themselves if that direction ﬁts their long-term goals.”

A common structural change is the spin-off of audit functions into separate entities.

Jeffery Mowery, CPA, JD, LLM, CFP, managing partner and cofounder of Mowery & Schoenfeld LLC, a ﬁrm that’s maintained its independence from PE, questions whether these spun-off audit practices might be underfunded or pressured to cut corners, potentially undermining public trust.

One of the main deterrents to PE for many ﬁrm leaders is the fear of losing a sense of who the ﬁrm is (i.e., its culture).

Rampe notes that some PE professionals have significant experience in accounting firms and understand the traditions and cultures that come with those environments. Others, however, have no experience, and Rampe says that can backfire if PE firms are attempting to make rapid change: “I think you’re going to hit very strong resistance if you don’t understand or disregard a firm’s tradition and culture.”

Mowery says he’s already starting to see disgruntled professionals leave PE-backed ﬁrms. For example, a partner that he recruited from a PE-backed ﬁrm is now starting a new service line. “The A players aren’t going to stay,” he predicts.

And despite what some say, Mowery stresses that clients do very much care about who owns the ﬁrm, especially if they’re suddenly receiving services from someone new.

Lessons From Firms That Said No

For Chicago-area ﬁrms like Mowery & Schoenfeld and Topel Forman LLC, the answer to PE investors is still no—they know that an inﬂux of capital comes with cultural tradeoffs and questions about long-term control.

Some ﬁrms aren’t just resisting PE opportunities and offers—they’re walking away from them. Others have gone through due diligence and backed out before closing. Some, like Mowery, aren’t even taking phone calls.

According to Thomson Reuters’ 2025 State of Tax Professionals Report, 57% of ﬁrms said PE isn’t even on their radar, and another 30% said they’re not interested even when approached.

While PE has been touted for the fat paychecks that retiring partners can receive upon closing, not everyone is satisﬁed. For example, after Grant Thornton sold a 60% stake to New Mountain Capital last year, 350 retired U.S. partners hired lawyers to represent them, arguing that lump-sum payouts understated their earned retirement beneﬁts. They contended that the “discount rate” used was manipulated to favor current partners.

Lewis says he’s not hearing about regrets so much as discomfort over growing pains. PE can be aggressive about making acquisitions and some leaders would prefer to pump the brakes to better integrate ﬁrms before moving on to the next batch. Koltin also notes that the administrative work required can be a headache as well.

Strong Diﬀerentiators Can Fend Oﬀ PE

So, can ﬁrms stay independent and still compete? It’s not easy, but some ﬁrms are proving it’s possible.

Mowery & Schoenfeld, for example, has a lot going for it—fast growth, a group of young partners, investment capital, top talent, and a reputation for being a great place to work. “The reasons we’re an attractive target for PE ﬁrms give us the ability to remain independent,” Mowery says.

The firm’s key differentiators are an entrepreneurial mindset, familylike relationships with clients, a strong emphasis on professional development, and career growth with staying power. In fact, seven of 18 partners began their careers with the firm. “I couldn’t sell this firm out from under those people. I couldn’t and wouldn’t do that— I couldn’t face them,” Mowery explains. “We have people who’ve worked in this firm for 20 years. It’s the only job they’ve ever had, and they’re phenomenal at it.”

Additionally, Topel Forman has doubled in growth over the last ﬁve years from $20 million to about $40 million—all without PE.

Managing partner David Levine, CPA, JD, says one of the firm’s key differentiators is the flexible culture, where not one of its 150-person staff are required to work from the office. Also, Topel Forman’s small-firm mentality means the partners truly have a say in controlling their destiny. And more importantly, its clients and staff prefer the firm to stay independent.

“We’ve been trying to reimagine what an accounting ﬁrm should be. We’ve ‘over-hired’ to lower our busy season hours,” Levine says. “We’re trying to make this more of a regular profession without killing our people a couple times a year during deadlines.”

In May 2025, Topel Forman’s partners fully examined the PE issue over a two-hour meeting and decided against it. “This is where we want to be right now,” Levine explains.

Getting Your Firm Ready to Compete With PE

Not every ﬁrm that wants to stay independent has the foundation that ﬁrms like Mowery & Schoenfeld and Topel Forman enjoy—but with deliberate work, they can build it.

Rampe advises that firms first think about why they started their firm, and what’s their differentiator? If you’re a plain vanilla firm, with the same mission statement you can find on any other firm’s website, Rampe says it’s likely time to go back to the drawing board. Firms should also think about their culture and their clients, asking themselves what they want to preserve about their culture. Rampe advises firms to get a strong understanding of what their clients need and their pain points, their firm’s most valuable service, and how clients want to buy services from them.

Brown suggests that ﬁrms who want to remain independent but also compete with PE-backed ﬁrms take these actions:

• Raise prices and exit unproﬁtable client relationships to release trapped margins.

• Focus on niche sectors to command higher fees and build deeper client relationships.

• Use Small Business Administration loans, bank lending, or employee stock ownership plans for funding instead of giving up equity to an external entity.

• Redesign succession and equity structures to retain and reward emerging leaders.

• Use offshore support and automation to scale without expanding headcount.

• Merge with like-minded independent ﬁrms to gain scale without sacriﬁcing ownership.

• Build a strong internal culture that appeals to professionals who want purpose as well as pay—not just a paycheck.

In this environment, Levine notes that ﬁrms must run more efficiently, hold partners accountable, and be willing to invest in talent and technology: “If you’re not going to take this potentially lucrative offer from PE, then you can’t also tuck your checkbook in your back pocket and not invest in your business—you’ll get left behind.”

Raising Capital Without PE

To preserve ownership, some ﬁrms are also exploring multiple alternatives to fund their futures:

• Going public: Andersen Tax has taken a major step toward going public, ﬁling for an initial public offering that would make it only the second publicly traded accounting ﬁrm after CBIZ.

• Minority investments: Bain Capital’s stake in Naperville, Ill.-based Sikich, a top 25 ﬁrm, is providing needed capital while allowing current leadership to remain in control.

• Family offices and sovereign wealth funds: These investors are increasingly pursuing minority positions in accounting ﬁrms to gain access to estate, tax, and philanthropic planning expertise.

• Selling non-core assets: Spinning off wealth management or consulting units can generate capital without selling the ﬁrm.

Is PE Good for the Profession?

According to IPA’s PE survey, 39% of respondents—most of whom were CPA ﬁrm partners or managing partners—believe PE is raising the competitive bar, 39% believe it’s too soon to tell, and the remainder consider it a negative force. What’s more, 55% of managing partners believe PE is a short-term phenomenon or aren’t sure.

Lewis believes PE is vital for the profession, which can be undisciplined about making needed investments: “The profession was literally dying without PE.”

Koltin echoed this sentiment: “In this business, if you don’t grow, you die a slow death.”

Overall, Rampe believes it comes down to execution: “Do PE ﬁrms bring in high-quality and happy team members, great client experience, better technology, and better proﬁt for everyone? If so, I think they could elevate the industry, especially at this moment when the profession could use some overhaul.”

Despite the positives that PE can bring to the profession, consulting experts stress that accepting a PE investment isn’t right for everyone—and ﬁrms that want to resist PE must be proactive.

“Independence isn’t a default anymore,” Brown says. “It’s a strategy you have to ﬁght for. It’s got to be resourced, priced, and protected—otherwise you’re putting your head in the sand if you think PE isn’t coming for you.”

Whether ﬁrms are leaning toward a PE deal or committed to staying independent, the most important action for them now is to make an intentional decision—aligning their values, culture, and future.

Chris Camara is a Rhode Island-based freelance writer who has covered the accounting profession for more than 20 years.

Claire Burke, CPA CFO and Treasurer, Dearborn Group claire_burke@mydearborngroup.com

Why Internship Programs Are a Win-Win Your Company Can’t Afford to Ignore

When

you consider all the benefits internship programs bring to both employees and organizations, you really can’t afford not to offer one.

One of my earliest supervising experiences was through a former employer’s internship program. I was new in my career and had my sights set on the management track. The internship program provided me with experience in the hiring process, coaching, and performance management, all in a low-risk environment.

My department at the time, Financial Planning & Analysis, was the perfect setting for bringing in interns. We had a lot of spreadsheet and data compilation work, and the department offered exposure to many facets of our business, providing a win-win for both groups: The company benefited from cheap labor, and the interns got to build their resumes and gain business knowledge.

But I’d argue the benefits stretch well beyond that. After all, an internship program provides a multitude of benefits for both employees (interns and those managing them) and organizations. A few notable benefits include:

• Providing training grounds for future leaders: Leveraging the opportunity for your nonmanagers to get experience managing someone else can provide leadership development for the high potentials on your team. This is also an economical way to help develop future leaders within your organization. It’s perfect on-the-job training and a relatively safe environment for someone to practice their leadership skills. Many times, it’s challenging to break into the management level, but having supervisory experience can help build that acumen and open doors.

• Attracting new talent: The ability to attract talent is a common challenge in the accounting and finance profession, especially attracting candidates new to the workforce. Offering a formal internship program that provides an inviting, stimulating work experience can help attract young, soon-to-be professionals to our profession and your organization. The key is to make sure the experience is also enriching for the intern. Give them exposure to senior leaders, such as offering “Ask Me Anything” opportunities to learn more about the company’s leadership. Additionally, let them attend meetings so they can experience listening to discussions on real-life business matters. You can also give them an opportunity to work on a team project and join in on any team-building activities.

• Creating long-duration interviews for entry-level roles: During the internship, you can evaluate an intern to determine if they’d be a good long-term fit for your organization (and they can do the same). You’ll gain much more intel on an intern this way than you would during a typical interview process—you may even end up hiring them full-time upon graduation, saving both time and money on recruitment efforts and fees. And the best part? You’re hiring a known entity who knows the culture and inner workings of your organization.

• Injecting new ideas and fresh perspectives: Interns bring fresh perspectives and different ways of thinking into an organization. In fact, they usually can find better ways of doing things. Therefore, it would be wise to turn them loose on a project that deals

with basic automation. If there’s a process involving spreadsheets and manual inputs, for example, turn it over to an intern with the direction to automate as much as they can. I have also used interns to help build databases of financial data and develop basic data visualizations—all tasks that my current team never had the capacity to pursue.

Over the years, I’ve had opportunities to experience different successful internship programs, including the one I previously mentioned with a former employer who hired interns who were college juniors and seniors, many of which acquired college credits for the internship. This specific program had a great track record too. Several of the interns were hired for full-time positions upon graduation and ultimately rose through the leadership levels in the company. A couple of them actually ended up in some of my former positions, which were proud moments for me.

My current company has previously offered a summer internship program that hires college students. While it was short, we did our best to have work lined up for the interns and make it an enriching and positive experience. We also hosted activities that involved all interns across the company. While I’ve seen more success stories than failures, the harsh reality is the workplace is different from school, and some interns have a tough time adapting. Ensuring your interns understand simple business etiquette, such as expectations for the start and end times of the workday, how to schedule time off or call in sick, and composing business emails, can help set them up for success.

The most common reason I hear companies say why they don’t offer an internship program is: “We simply don’t have it in the budget.” Sound familiar? While internship programs can be seen as an added expense, having an appropriately sized program for your organization can reap benefits that outweigh costs.

Remember, interns generally earn much less than full-time employees do; the program provides opportunities for your staff to practice their leadership skills and develop into future leaders; and interns can spend time on initiatives, such as process automation, that your current team doesn’t have time for. Plus, you may be developing someone that becomes a permanent employee, which saves your organization even more time and money in the end. All this considered, offering an internship program is a win-win opportunity you can’t afford to miss.

Brian J. Blaha, CPA Managing Director, Winding River Consulting LLC

bblaha@windingriverconsulting.com

ICPAS member since 2011

The Key to Cross-Selling CPA Services? Being Client Centric

To successfully serve clients with multidisciplinary solutions, firms must deliver value the way clients want to experience it—at the center.

Cross-selling has been one of the most persistent barriers to growth in certified public accounting (CPA) and advisory firms—particularly as firms invest more heavily in advisory services.

Over the years, we’ve seen a range of tactics used to crack the code: service line spotlights, internal training, customer relationship management (CRM) implementations, gamification, and a mix of incentive programs. Some show flashes of success, but for most firms, the results are temporary. That’s because the cross-sell challenge isn’t simply about tools or tactics—it’s structural, cultural, and personal.

To make progress, we must stop asking how we can better cross-sell and instead ask, “What would have to be true about our structure to holistically serve the client?”

WHAT DOES IT TAKE TO BE TRULY CLIENT CENTRIC?

Serving clients with multidisciplinary solutions requires a shift that affects every aspect of a firm’s design and mindset—you have to flip your perspective from what services you sell to what problems you can solve.

To be a truly client-centric firm, these are the foundational characteristics you need to adopt:

• Client-centric orientation: You’ll need to see the full picture of the client’s business. In every conversation, it should be 80% listening to your client and 20% talking to your client—let curiosity drive the relationship.

• Clear roles and processes: Define how client teams work together across departments. Ensure every team member knows their role and how they support the broader client relationship.

• Firmwide mindset shift: Clients don’t belong to a partner or service line—they belong to the firm. Every interaction is an opportunity to steward that relationship together.

• Cross-functional trust: Trust must extend beyond service lines. Collaboration is only possible when credibility is shared and accountability is mutual.

• Enablement through knowledge: Cross training must become part of your firm’s DNA. People can’t connect clients to other parts of the firm if they don’t understand them.

• Aligned systems and incentives: CRM systems must enable shared planning, not siloed activity. Additionally, incentives should reinforce collaboration and client-centric behavior, not protect turf.

• One-firm experience: Regardless of who’s delivering the work, the client experience should feel unified. It’s important to remember that consistency in delivery strengthens brand trust and deepens loyalty.

WHAT STRUCTURAL MODELS SUPPORT CLIENT CENTRICITY?

Most firms still organize primarily by service line. From an internal lens, it makes sense. It’s how we manage delivery, develop technical talent, and track financial performance. But from the client’s perspective, it creates disjointed experiences, missed opportunities, and stunted growth. Service line structures foster siloed thinking—and that’s where cross-selling dies.

In many firms, the relationship executive (RE) is assigned based on the first service delivered. For example, if the first engagement is an audit, the RE is an auditor. If it’s a valuation, the RE is an advisor. The problem with this approach is that the initial service provided to a client often dictates the lens through which they see the entire firm. As one CPA firm partner said bluntly, “We’re great at selling additional services within our department—not across them.”

To solve this, firms need to shift their mindsets from selling services to solving problems and back it up with structural change.

So, what structural models best support client centricity? I believe most CPA and advisory firms would benefit from a hybrid approach, using a combination of the common models shown in the chart below. Typically, combining service line infrastructure with either industry specialization or client account teams works best.

This dual-accountability model gives you the best of both worlds: depth of technical expertise and breadth needed to understand and address the client’s full business needs. It also aligns with how clients think—holistically, not functionally.

Model Type

Strengths

Service Line Technical depth, margin control.

Limitations

Siloed behavior, weak cross-sell, fragmented client experience.

Industry/Sector Tailored insights, client relevance. Requires deep specialization, hard to scale.

Geographic Local connection, responsiveness.

Inconsistent standards, limited cross-office integration.

Matrix Balances service and sector. Role confusion, competing priorities.

Client Account Teams Relationship depth, holistic strategy. Resource-intensive, governance complexity.

Pod/Squad Innovation, agility. Hard to scale, needs strong cultural alignment.

BEGINNING THE SHIFT TO CLIENT-CENTRIC TEAMS

Client-centric delivery starts with how we form and manage client teams. For instance, many progressive firms are now adding client success managers (CSM)—often from customer service or account management backgrounds—and making them the first point of contact. The CSM partners with the RE to manage the overall relationship, ensure coordination across service lines, and build connection with the client’s full leadership team.

These teams also include engagement managers from each active service line, plus any associates working on the account. Ideally, many of these professionals will bring industry expertise to their roles—which will become more scalable the more narrowly a firm defines its niche.

This structure is especially effective when wrapped within an industry segmentation strategy. It reinforces the relevance of the firm’s advice, deepens relationships across client stakeholders, and increases the likelihood of multidisciplinary expansion.

To begin shifting to a client-centric firm, consider these five actions:

• Audit your current organizational design through a client lens: Map how a client actually experiences your firm across services. Where are the handoffs choppy? Where’s value being lost?

• Define clear roles for relationship and delivery management: Separate who owns the relationship from who delivers the work. Consider adding CSMs to orchestrate delivery.

• Align incentives to shared success: Review compensation plans, bonus structures, and promotion criteria. Do they encourage firmfirst thinking or service line protectionism?

• Build cross-functional client teams: Assemble teams with defined roles across service lines and industry expertise. Hold joint planning sessions and account reviews.

• Develop a one-firm training and enablement program: Invest in cross-education to ensure every team member can identify client needs beyond their specialty and know how to act on them.

Remember, cross-selling isn’t a campaign—it’s an outcome. It’s a byproduct of aligning your firm to deliver value the way clients want to experience it. If your organizational chart makes sense internally but breaks down at the client level, it’s time to rethink it.

Delivering multidisciplinary services starts not with a sales push but with a design principle. First, organize around the client, not the service. From there, every system—roles, incentives, technology, and governance—must reinforce that model.

Ultimately, the firms that’ll thrive in this new era are those bold enough to reimagine how they operate—with the client at the center, not the margins.

We’re already planning for next year, and we want you to be a part of it.

Share your expertise at ICPAS SUMMIT26 and gain recognition from your peers as a presenter at the largest learning event for accounting and ﬁnance professionals in Illinois.

To learn more or submit a proposal, visit: www.icpas.org/summitspeakers

Jon Lokhorst, CPA, CSP, PCC

Executive Leadership Coach, Your Best Leadership LLC jon@yourbestleadership.com

How to Effectively Bridge the Gap With Next-Gen Talent

For today’s leaders, bridging the generational divide isn’t optional—it’s essential for building resilient, forward-thinking organizations.

To some degree, organizational leaders have always faced challenges in navigating generational differences in the workforce. For instance, leaders from the baby boomer generation, many now retired or nearing retirement, scratched their heads as Gen X stepped into the work world of the 1980s and 1990s. Together, these two generations often struggled to lead millennials who began to flood the workforce in the early 2000s.

Today, early-career workers represent Gen Z, roughly defined as those born between 1997 and 2012. Like past generations, this cohort brings its own way of thinking, working, and leading into the workplace, creating complex and novel challenges to those who lead them.

A global research report by workplace analytics firm Marlee, “Unlocking Gen Z at Work: A Generational Impact Study 2024,” provides a data-driven perspective on the key differences between Gen Z and its predecessors. With data collected from 90,000 individuals in the United States and 400,000 worldwide across a 23-year period, Marlee’s research offers powerful insights into how this generation is reshaping the ways organizations engage, develop, and retain employees.

COMMUNICATION

According to Marlee’s study, Gen Z shows a 44% increase in preference for written communication and a 45% decrease in motivation for verbal communication, compared to earlier generations. Raised in a world of texts, instant messaging, and email, this younger generation is more comfortable processing information through reading and reflection than spontaneous dialogue. Marlee also found a 120% increase in Gen Z’s desire for detail orientation and a 45% drop in their comfort level with ambiguity, indicating that they want more explicit step-by-step guidance for their work.

These factors emphasize the need to provide early-career workers with clearer, more specific communication in written or digital form. Here are some suggestions for doing so:

• Provide supplement verbal instructions with written checklists or an artificial intelligencegenerated summary from Zoom or Microsoft Teams.

• Optimize workflow management software with documented steps for performing accounting, auditing, and tax work.

• Include well-defined milestones, time budgets, and deadlines.

• Include younger workers in in-person meetings and telephone conversations to develop a greater comfort level with verbal communication.

MOTIVATION

Marlee found that Gen Z employees are much less motivated by big-picture, visionary goals than workers from previous generations. Instead, 58% of Gen Zers are more energized by having an impact in solving real-world problems. They want to know how their work makes a difference or contributes to something bigger than themselves. This is consistent with Deloitte’s “2025 Gen Z and Millennial Survey,” which found that 89% of Gen Zers connected a sense of purpose with job satisfaction and well-being.

As Marlee’s founder and CEO, Michelle Duval, shared in a webinar presentation on the firm’s findings, “Significant Generational Changes Shaping the Future of Work in 2025 and 2026,” vision and goals are still important, but leaders need to connect the dots between big-picture and more pragmatic, impactful outcomes. For instance, leaders should help young professionals connect their performance of routine accounting functions and financial reporting to how they help teams and clients make better decisions that benefit their stakeholders and communities. It’s about emphasizing impact and value, not just task completion and meeting budgets and deadlines.

LEADERSHIP

One of the more striking findings in Marlee’s study is that only 31% of Gen Z workers scored high in taking initiative, an early marker of leadership potential. They’re more inclined to pause and wait before acting—in many cases because they lack confidence to take the next step without a defined plan. They’re also less motivated by achievement and competition than previous generations, which often results in a lower drive or desire to pursue leadership. In fact, in Deloitte’s study, only 6% of Gen Zers said their primary career goal was to be promoted to a leadership position.

Similarly, Marlee found that Gen Z workers are more responsive to affiliative or relationship-based leadership than to competitive, results-driven leadership. For this generation, leadership based on a title, position, power, or authority doesn’t work. Instead, Gen Z workers desire a personal connection and a sense of belonging from their leaders, with the ability to show up to work as their true selves. They also appreciate consistent feedback, coaching, and mentoring to further their career growth and learning.

These insights offer a unique opportunity for organizations to alleviate a potential leadership gap in the years ahead. As you continue to coach or mentor Gen Z workers, consider:

• Using coaching-based leadership that prioritizes individual growth and development.

• Shifting from traditional performance reviews to ongoing coaching conversations that frame feedback as growth opportunities.

• Implementing regular one-on-one check-in meetings that invite Gen Z employees to share their own observations and needs beyond simple task completion.

THE BRIDGING CONVERSATION

While it’s helpful to learn these generational trends, it’s far more important to get to know your early-career workers as individuals where you can discover their unique style, preferences, and motivations. To do so, consider engaging with each of them through what I call a “bridging conversation.” These conversations provide a focused opportunity for you as a leader to learn from them. Find a comfortable spot, preferably away from the office, where you create dialogue with thought-provoking questions like:

• What motivated you to pursue a career in accounting? How often do you get to fulfill that motivation in your work here?

• What parts of your job do you enjoy most? What parts are most frustrating?

• Have you ever considered leaving the accounting profession? If you left, what would be your reason for leaving?

• What could we change to improve your work experience, even if those changes took a while to implement?

• What opportunities for growth and development would excite you?

• What ideas do you have for helping our organization thrive and grow in the future?

In order for these conversations to be effective, it’s important that you approach them with curiosity and an openness to learn. After all, Gen Z holds the answers to many of the challenges our profession is facing, and your support might encourage them to seek future leadership positions in your organization.

While it’s tempting to overgeneralize the characteristics of an entire generation, it’s essential for accounting and finance leaders to recognize these workplace trends if they want to build businesses that’ll thrive and grow in a rapidly changing marketplace. At the same time, it’s crucial to view the problematic aspects of these trends as opportunities to train, coach, and mentor early-career workers for greater effectiveness and impact in the profession.

Elizabeth Pittelkow Kittner CPA, CGMA, CITP, DTM CFO and Managing Director, Leelyn Smith LLC ethicscpa@gmail.com ICPAS

member since 2005

Ethics Against the Clock: Maintaining Integrity While Meeting Deadlines

Doing what is right, even during difficult or inconvenient times, is a true reflection of ethical leadership.

Deadlines. They are consistently part of our work within the accounting and finance profession. At times, the pressure of completing work on time may conflict with our typical quality and review processes and standards. It is in these moments that our ethics and commitment to integrity may be challenged.

Every day, we face both extrinsic and intrinsic pressures in our work. Extrinsic pressures can come from our clients, colleagues, and regulators, while intrinsic pressures can come from our desire to maintain our individual and business reputations, motivate team members, and exceed clients’ expectations.

Importantly, pressure is one of the four elements of the Fraud Diamond, where it is specifically referred to as “incentive.” The Fraud Diamond, which was introduced in 2004 by David T. Wolfe, CPA, and Dana R. Hermanson, Ph.D., is an extension to the longestablished Fraud Triangle, a model framework developed in 1953 by Donald R. Cressey, Ph.D., in an effort to understand the factors that lead individuals to commit fraud.

Another element of the Fraud Diamond is “rationalization,” which means justifying unethical or fraudulent behavior. When deadlines loom, and we are experiencing fatigue, scope creep, or late client responses, we can be tempted to justify shortcuts with various ways of thinking, such as:

• “The likelihood of audit (or someone finding out) is low.”

• “The team probably did it correctly.”

• “We do not have time to fix it.”

• “We are already over budget.”

• “It is close enough.”

These types of justifications are dangerous because being ethical is not about making yourself feel good about a decision; it is about doing what is right, even if it is difficult or inconvenient.

As humans, we are good at justifying our behavior. Even well-meaning professionals may fall into ethical dilemmas if they can justify the reasons for their behaviors, like skipping review, not fully documenting assumptions, or underreporting hours. However, these processes help to ensure quality and accuracy in the work being performed. If a deadline is prioritized over quality and accuracy, it can lead to serious consequences, including erosion of trust with clients and within the team, failure to meet regulatory standards, damage to both the firm’s and individuals’ reputations, and more.

One way to approach various time pressures that are inherent in our work is to apply project management techniques to help things run more smoothly. Here are a few to consider:

• Set clear scope expectations: Scope creep is a contributor to time and budget pressures. If a client is continually asking for more from you, determine if it is part of the original scope or should be considered a separate billable project. It is important to have signed engagement letters outlining the scope of work and then issuing new engagement letters or amendments to existing ones whenever there are changes. Internal projects are also subject to scope creep. If you are working on a special project, for example, it is easy for the scope to change or expand while you are working on it. Therefore, it is crucial to communicate new deadlines for additional work so you can clearly set expectations for the team and complete the project within a reasonable time frame.

• Define roles and responsibilities: Work goes better when people understand their responsibilities and there is a level of accountability on the team. In some instances, a responsible, accountable, consulted, and informed (RACI) matrix can help outline specific duties and responsibilities for team members. Gantt charts can also be used to set timelines for projects and, when used in conjunction with a RACI matrix, may improve clarity, promote more effective communication, and reduce confusion or duplication of work. Gantt charts can also define risks within a project, which can help identify key tasks to be completed to keep work on time and within budget.

• Track workload and capacity: When someone is responsible for monitoring the workload and capacity of team members, it can lead to quicker and more effective changes when people are out unexpectedly or get pulled onto a higher priority project. It can also help team members feel more valued when someone understands the work they are doing and how it contributes to the overall project. To best monitor team members’ workloads, hold regular meetings to discuss the statuses of projects and any obstacles that may be impeding progress or causing delays. These status meetings may also lead to timely workload shifts among the team and prevent opportunities to stray from the process since there is ongoing review of the work. Another tenet of the Fraud Diamond, “opportunity,” arises when projects are not adequately monitored, which creates conditions that make unethical behavior more likely.

Overall, communicating truthfully and transparently transcends each of these techniques and should be implemented throughout work projects, including debriefing meetings where team members can celebrate a project’s completion, discuss what went well, and brainstorm ideas for future processes.

While pressure cannot be completely removed from our work, project management principles such as these can help. As leaders, we can contribute to a positive working environment by imposing real and realistic deadlines. As team members, we can communicate early on in a project when we see something that may cause time or budget pressures to arise.

Of course, our own personal integrity defined as “doing what is right when no one is watching” also contributes to the culture of our project work and success of our teams. This idea brings us to “capability,” the fourth and final element of the Fraud Diamond, which determines whether a person has the right skills, knowledge, and position to commit a fraud. This element finds that people who inherently work more honestly, demonstrate strong character, and practice servant leadership are less likely to take unethical shortcuts even when presented with the incentive, rationalization, and opportunity to do so.

Ultimately, doing what is right under time pressure is a measure of ethical leadership and one that reinforces trust, integrity, and resilience within our teams.

Art Kuesel President, Kuesel Consulting art@kueselconsulting.com

Rethinking Independence: 4 Exit Strategies for CPA Firms to Consider

Are you rethinking the value of going it alone? Here are some exit strategies that can give you peace and confidence in where your firm is headed.

Whether related to people, technology, the burden of administrative duties, or simply staying abreast of rapidly evolving tax and accounting regulations, certified public accounting (CPA) firms across the country are facing a whirlwind of competing priorities that feel truly unsustainable, pushing them to consider an exit strategy.

For many CPA firm leaders, it can be hard to reconcile that the best path forward may not be continuing along the road of independence. If you come to this conclusion, I can assure you that you’ll still likely encounter mixed feelings about it. You may feel great comfort in deciding that you’ll no longer “go it alone.” You may also be apprehensive about the road ahead. Maybe you know anecdotally what a CPA firm merger may be like because you knew someone who went through one. Maybe you helped a client get acquired by a private equity (PE) firm and your expectations are framed by that experience (positive or negative). Or perhaps the entire process will feel foreign to you.

Regardless of what you’re feeling, one thing is certain: You’ll likely have many choices and options as you pursue an exit strategy. Here are just four to consider.

1. TRADITIONAL UPSTREAM MERGER

Historically, this has been the most common path for CPA firm owners seeking an exit. With this option, you essentially combine with another CPA firm and integrate into their systems, processes, and technologies. This firm could be a national, regional, or local firm. In these cases, you may or may not keep your office. This firm would likely hire most, if not all, of your people and would likely maintain current compensation for staff and partners. As a partner, you may vest into their deferred compensation system, or if you’re near retirement age, you might earn your buyout upon retirement over several years as agreed upon with the acquiring firm. What’s more, some firms may even embrace models like an employee stock ownership plan that distributes ownership and equity beyond the partner group.

2. PE PLATFORM

This is a relatively newer exit strategy available to CPA firms. With this option, you join a PEowned platform (or network or association) of like-minded CPA firms interested in sharing common resources that couldn’t be scaled or replicated in a stand alone manner. This option will likely yield firm valuations of double—if not more—based largely on your profitability. Also, terms may be more enticing, as PE buyers generally can afford large cash down payments and more favorable payment terms versus traditional buyers. Additionally, most PE platforms require some percentage of reinvestment in the platform (with a holding period) and offer generous rates of return. Mind you, the equity partner income pool will generally

see a reduction of half (give or take), which can be challenging for many partner groups to navigate. In this model, scale is often the name of the game, as is outsourcing, offshoring, and investing in technology. Some of your processes and systems may remain untouched, while others change and evolve to capitalize on scale. The state of the platform—emerging, growing, or established—will see the range of shared resources vary greatly. What’s more, many platforms believe in distributing equity beyond the partner group. There are many variables and options in PE platforms, and they’re continuing to evolve rapidly, as well as grow at rates well beyond historical averages.

3. PE-BACKED CPA FIRM

Being acquired by a PE-backed CPA firm is a unique hybrid of the first two options we explored. With PE backing, the firm can offer PE valuations, terms, and options, but also offer a more traditional merger integration experience as if you were combining with a regional or national firm. There’ll likely be a similar focus on longterm scale and efficiency but with external capital turbo-charging the pace. Growth will also likely be pursued aggressively to achieve scale and profitability goals.

4. NON-TRADITIONAL BUYER

Historically, this has always been an option, but only recently have non-traditional buyers begun to aggressively pursue ownership in CPA firms. One example of a non-traditional buyer would be a large wealth management firm seeking a CPA firm to serve its clients with a variety of tax and accounting needs. With non-traditional buyers, the valuation and terms can vary greatly and may appear as the hybrid of hybrids, with some aspects of the transaction being more like a traditional merger and others being more like PE.

Bottom line, with any of these four paths, it’s important to balance and weigh the financial aspects of the transaction with the non-financial aspects. Things like culture, staff, and client “fit” matter and can’t be reduced to a number on a spreadsheet. Also, it’s important that you don’t feel the need to “settle” or accept the first offer you receive. It’s your right and responsibility to understand the landscape and select the best path for you, your firm, your people, and your clients. Even if your first choice doesn’t ultimately pan out, knowing you evaluated and considered all options available should help you feel better about where your firm is headed.

What’s Ahead in Accounting and Finance

Join ICPAS President and CEO Geoffrey Brown, CAE, and Board of Directors Chair Brian Blaha, CPA, as they share some key ICPAS updates along with their outlook on what lies ahead for the profession.

Enjoy breakfast or lunch while you network with colleagues and earn 1.5 hours of FREE CPE!

> October 29, 2025 Springﬁeld

> October 30, 2025 Champaign

> November 4, 2025 Orland Park

> November 5, 2025 Wheeling New Location!

> December 4, 2025 Oak Brook New Location!

> December 10, 2025 Chicago

> December 10, 2025 Virtual

To register or for more information visit: www.icpas.org/townhall

Help develop the future of our profession!

Invite a young professional colleague to come with you.

Andrea Wright, CPA Partner, Johnson Lambert LLP awright@johnsonlambert.com

ICPAS member since 2010

Not for Sale: Independence Is Still a Viable Choice for CPA Firms

Thriving without private equity isn’t about rejecting progress—it’s about pursuing a different, more self-directed vision of growth and success.

I recently saw a social media post from Carla McCall, CPA, CGMA, managing partner at AAFCPAs and the AICPA’s immediate past chairperson, that simply stated, “Not for Sale.” Initially, the post made me laugh out loud (literally). But as I studied the comments on the post, I began to realize that she was making a very bold and public declaration: Her firm had no intention of joining the private equity (PE) gravy train.

In the modern accounting landscape, a powerful narrative has taken hold: PE investment is the essential catalyst for growth, technology adoption, and succession. The headlines are filled with stories of mega deals and PE-backed consolidators, creating an impression that the traditional certified public accounting (CPA) firm and partnership model are endangered species. This has left many firm leaders asking a critical question: Can we still compete?

While it’s true that PE offers a potent and capital-intensive path forward, it’s far from the only road to success, which is why I’d like to add my voice to the choir of those who’ve chosen to remain independent (at least for now) and why I believe it’s still a viable choice.

THE UNMATCHED ADVANTAGE OF TRUE INDEPENDENCE

Why fight to remain independent in a consolidating market? The traditional partnership structure, often maligned as slow or outdated, possesses inherent strengths that PE ownership can dilute.

First and foremost, it offers unquestionable trust. In a world of complex corporate structures, clients and the public rely on an auditor’s unwavering objectivity. A firm free from the influence of a PE owner—whose primary fiduciary duty is to its investors, not the public interest—can offer a level of perceived and actual independence that’s increasingly rare and valuable. This is a powerful differentiator in the marketplace, particularly for attest clients who are under intense regulatory scrutiny.

Second, independent firms offer agility and autonomy. They can make decisions based on what’s best for their clients and their people over the long term without needing approval from a board focused on quarterly returns or a five-year exit strategy. They can pivot quickly to enter a new market, invest in a promising niche, or customize a service offering without the bureaucratic layers that can accompany PE ownership. This entrepreneurial spirit is the lifeblood of many successful local and regional firms.

A PLAYBOOK FOR INDEPENDENTLY THRIVING

Competing against firms supercharged with PE capital requires a deliberate, focused strategy. It’s not about matching their spending, but it’s about being smarter, more focused, and more connected to the core values of the profession. Here are four strategies that can help firms independently thrive.

1. Embrace Niche Domination Over Generalization

The era of the generalist CPA firm is fading. PE-backed giants aim to be everything to everyone, leveraging their scale to offer a vast menu of services. The most effective counterstrategy for an independent firm isn’t to imitate this, but to do the opposite: become the undisputed expert in a specific niche.

This could mean dominating a specific industry, like life sciences, construction, or government contracting. It could also mean building a powerhouse practice in a complex service line, like international tax; cybersecurity compliance; or environmental, social, and governance reporting. By developing deep domain expertise, a firm transforms itself from a commodity provider into a high-value, premium-priced specialist. Importantly, clients with complex problems don’t seek the biggest firm—they seek the best firm for their specific issue. Niche domination creates higher margins, long-lasting client relationships, and a reputation that attracts top talent.

2. Leverage Technology as the Great Equalizer

A common argument for PE is the need for capital to fund technology. However, the cost of powerful technology has plummeted. Cloud computing, artificial intelligence (AI) for process automation, and sophisticated data analytics tools are more accessible than ever. These days, independent firms don’t need a nine-figure investment to build a modern tech stack.

The key is strategic adoption. Instead of buying every shiny new tool, independent firms should focus their investments on technology that directly enhances efficiency and client value. This may include:

• AI-powered audit tools that automate routine testing, allowing auditors to focus on higher-risk areas and analysis.

• Client advisory services platforms that integrate bookkeeping, payroll, and financial planning to provide real-time business insights.

• Advanced data analytics software to turn a client’s raw financial data into predictive models and strategic recommendations.

By using technology to automate the mundane and elevate their advisory practices, independent firms can deliver a client experience that rivals, and often exceeds, that of their larger competitors.

3. Cultivate a Magnetic Culture for Talent and Succession

The “succession crisis” is often cited as the primary driver for PE, as these deals offer aging partners a lucrative exit. However, this is a short-term solution to a long-term problem. The sustainable solution is to build a firm that the next generation is excited to lead.

Culture is the independent firm’s ultimate weapon in the war for talent. While PE-backed firms may offer high salaries, independent firms can offer a more compelling, holistic package that includes:

• A clear path to partnership: Ambitious professionals are motivated by the genuine prospect of ownership and a seat at the table.

• Entrepreneurial freedom: The ability to build a book of business, pioneer a new service line, and have a direct impact on the firm’s direction is a powerful draw.

• Work-life integration: Free from the “growth at all costs” pressure, independent firms are better positioned to offer the flexibility and balance that modern professionals demand.

Furthermore, a firm that invests in mentorship, fosters a collaborative environment, and provides a tangible path to leadership won’t have a succession problem—it’ll have a line of qualified individuals eager to carry the torch.

4. Pursue Creative Capital and Strategic Alliances

Growth still requires capital, but PE isn’t the only source. Independent firms can fund their ambitions through a combination of traditional bank financing, disciplined reinvestments, and partner capital contributions.

They can also achieve scale and expand their reach without merging or selling. By forming strategic alliances and joining networks of other independent firms, they can collaborate on large engagements, share best practices, access specialized expertise, and co-invest in technology. These networks allow firms to retain their autonomy and culture while gaining the benefits of a larger organization.

REDEFINING SUCCESS

Ultimately, thriving without PE requires a different definition of success. The PE model defines success as rapid scaling leading to a profitable exit for investors. The independent model can define success as sustainable profitability, deep client trust, an impeccable professional reputation, and a fulfilling workplace for its people.

The choice for CPA firms isn’t between selling out or falling behind; it’s a choice between two distinct futures. One is defined by external capital and shareholder returns, and the other—the independent path—is defined by professional autonomy, strategic focus, and an unwavering commitment to the clients and communities a firm serves. The independent path isn’t easier, but for those who navigate it wisely, it remains a profoundly rewarding and competitive way forward.

Brian Kearns, CPA, CFP, RIA Founder, Haddam Road Advisors brian@haddamroad.com

ICPAS member since

1989

I Love It. I Hate It. Insurance Keeps Proving Its Value

The insurance industry can be frustrating—but in this love-hate relationship, the value it brings to personal financial well-being keeps me coming back.

Insurance is foundational to the functioning of our economy, and having spent a long time in the financial planning world, I’ve learned just how valuable it is to a client’s personal financial well-being. But truth be told, my relationship with insurance has been a complicated one—I both hate and love insurance. Let me explain.

My first foray into the personal financial planning world was at a large insurance firm in downtown Chicago. I walked in with my certified public accountant (CPA) credential and 20 years of business experience ready to serve my new clientele!

Yet, despite my enthusiasm to change people’s lives for the better, it didn’t quite turn out that way. What I thought would be a great experience in learning how to best implement planning and investment strategies turned out to be a lesson in just how aggressive the hyper-sales model dominates personal finance in the United States. Needless to say, it made me wary of the insurance space.

POOR PUBLIC PERCEPTION

The industry has done itself no favors in the public eye over the years. The financial press loves highlighting occasions where policies are mis-sold or outright fraud is perpetrated. Yet despite the bad press it sometimes gets, it’s important to know that most advisors in the insurance industry are there to help clients make prudent decisions, and they expend a lot of time and effort explaining insurance-related benefits.

NOT AN INVESTMENT

In the past, insurance has inadvertently been sold as something it’s not. If an insurance salesman suggests selling an investment to fund an annuity, this is considered “investment advice,” and they may have violated the Investment Act of 1940 (and not even be aware of it).

The fact is that insurance isn’t an investment—it’s a risk-shifting contract (which I’ll get into later). While there may be an internal rate of return on balances within a contract, that alone doesn’t constitute an investment.

NOT ‘TAX-FREE’

Often, you’ll hear the words “tax-free” in the insurance space. Sorry folks, almost all insurance is funded with after-tax money. After-tax money isn’t tax-free, nor is the accumulation of contract funds. This is a fundamental issue with any financial plan, and clients need to understand the implications.

IT’S CONFUSING

Insurance can be opaque. The illustrations used to promote various plans are often confusing, with a bunch of columns labeled “Illustrated” and “Guaranteed.” Additionally, the idea of “cash value” is often difficult to explain to clients, especially when talking in terms of decades-long runways.

Insurance can also be convoluted. Over the years, I’ve attended many insurance webinars, and when I hear, “But wait! You can borrow against your policy value ‘tax-free’ and blah, blah, blah,” I wonder how far into the seventh level of purgatory I’ve fallen. Of course, despite the many reasons I hate insurance, a few subtleties also remind me of the value that insurance brings to a client’s portfolio. For instance, for a small fraction of someone’s overall net worth, insurance allows their overall personal financial system to be sheltered or protected from certain shocks or headwinds. So, this brings me to the complicated reasons why I love insurance.

CONTRACT MONEY

Let’s take out all the noise and focus on what insurance really is: It’s contract money. In light of a specific event occurring (accident, fire, medical issue, death, etc.), insurance promises a pre-defined dollar amount to be paid out to an individual under certain conditions. That literally is it. Of course, in these situations, there’s often nuances involved with the type of event or payout—but that’s where CPAs and financial planners can come in and bring their expertise to truly benefit their clients.

HEDGE PROTECTIONS

As I’ve previously pointed out, insurance isn’t an investment: It’s a hedge. In the risk management world, hedges cost money, but that cost can be the most valuable allocation to any planning strategy. Why? Because that hedge will protect either income streams or balance sheet values or both.

Here are two situations where a hedge can benefit your clients:

1. Long-Term Care

Fifty years ago, the first long-term care policies were priced like those of a disability event. That was a mistake. Long-term care is much more costly, and the insurance industry has been scrambling to address this issue ever since. Also, the policies were typically reimbursement based, which were a nightmare to manage (submit receipts, fight for payment, rinse, repeat).

About 15 years ago, the industry turned to one of its most powerful features: the accelerated death benefit for long-term care rider. This benefit is an indemnity-based plan, which offers a truly flexible solution to protect both a client’s income and assets. Here’s how it works: Upon the inability for the beneficiary to perform two of the six standard activities of daily living, a straight percentage of death benefit is paid monthly.

Long-term care is a critical issue in this country, and this benefit goes a long way to help hedge the potential costs of health care for a concerned family and, collectively, for our aging population.

2. Legacy Planning After SECURE and SECURE 2.0

When the individual retirement account (IRA) was created in 1974, conventional wisdom talked up the idea of deferring income until the “bracket drop,” when clients would retire, receive lower incomes, and IRA balances would be distributed and taxed at lower rates. What proceeded was one of the largest economic expansions in history, and these IRA balances have grown in parallel and retiree incomes haven’t gone down as expected. According to the Investment Company Institute, about 40 million Americans hold about $40 trillion in IRAs. A vast amount of these balances will be inherited, many through a stretch-IRA where beneficiaries can plan out their distributions for multiple decades. However, now Congress wants that tax revenue. So, with the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019, SECURE 2.0, and the 10-year rule, inheriting

a traditional IRA has become a potential planning nightmare for beneficiaries. For example, a beneficiary of a $2 million IRA could potentially end up with an added income of $200,000 per year and be in the highest tax brackets for a decade. That’s not what the plan was when mom and dad originally set up their IRAs.

Even author Ed Slott, CPA, a nationally recognized IRA expert, has gone on the record saying that IRAs are the worst possible asset for wealth transfer and estate planning, all thanks to the SECURE Act. Slott also says the tax exemption for life insurance is the single biggest benefit in the tax code and not used nearly enough because most people don’t focus on lifetime benefits.

So, what are some potential solutions to this IRA kerfuffle, you ask? Either, mom and dad can look at a Roth IRA conversion strategy to take some of the tax pain in their lifetimes or, you’ve guessed it, fund an insurance policy for the next generation. Or, some combination of the two. It’s the planner’s job to figure that out.

Again, a well-constructed insurance policy can take a miniscule percentage of a client’s overall wealth and fund a lump-sum payment to beneficiaries outside of the estate and without tax implications.

STRONG LOBBY

Lastly, it’s important to remember that the insurance lobby is absolutely massive in Washington, D.C. Unfortunately, there’s no IRA/401(k) lobby fighting for your clients’ IRA rights. What this means is the legal landscape for insurance plans probably won’t change much. As for IRAs and 401(k)s? Who knows?

My relationship with the insurance industry might be complicated, but time and time again, I’m reminded just how vital a mindful insurance policy can be to a person’s financial well-being. Which is why, when properly utilized, I love insurance.

Keith Staats, JD Special Counsel, Duane Morris LLP kstaats@duanemorris.com

ICPAS member since 2001

Decoding the One Big Beautiful Bill’s Impact on State Income Taxes

Uncertainty around the new federal tax legislation looms over Illinois income taxes as federal conformity hangs in the balance.

No doubt, the recently enacted H.R. 1 (also known as the One Big Beautiful Bill Act) will most likely impact and further complicate state income taxes. But the extent of that impact will depend on whether individual state income tax laws conform to the federal Internal Revenue Code (IRC).

Most states with personal and corporate income taxes piggyback, to varying degrees, off the IRC. Some states, like Illinois, automatically use the current version of the IRC as the starting point for their state income tax. Others adopt the IRC as of a fixed date and require state legislation to change to a later version of the IRC. And others still adopt different IRC provisions at different dates with significant variations.

Additionally, states use different points of the federal individual (Form 1040) and corporate (Form 1120) income tax returns as the starting point for their state income taxes. For example, Illinois uses the federal adjusted gross income (line 11 of Form 1040 for tax year 2024) as the starting point for the Illinois individual income tax. That means the Illinois calculation begins prior to any federal itemized deductions. The Illinois corporate income tax return begins with federal taxable income (line 30 of Form 1120 for tax year 2024).

THE ART OF DECOUPLING

States also decouple from certain provisions of the IRC. When the Illinois Income Tax Act (IITA) was first enacted, for example, the tax simply piggybacked on the IRC. At that time, drafters of the act hoped the change would simplify things, removing the need to audit taxpayers. Of course, that pipe dream never materialized.

Many years ago, Illinois decoupled from the IRC provisions that governed net operating losses and now has its own provisions. In addition, on multiple occasions, Illinois has adopted legislation temporarily restricting the use of net operating losses as a means of increasing state corporate income tax revenues in the short term.

Illinois also decouples from federal provisions dealing with depreciation and immediate expensing of capital purchases. In the year in which the item being immediately expensed is purchased, this method allows the state to increase its tax revenues over what they would be if Illinois followed the IRC. (I realize that expensing an item in year one versus taking depreciation deductions over a predetermined useful life yields the same deduction amount—but remember, legislators and departments of revenue don’t deal in the long term.)

As is sometimes the case, this decoupling makes things a bit more complicated for taxpayers. For instance, Illinois taxpayers are required to add federal depreciation deductions and the 100% expensing of capital purchases back to federal taxable income

before calculating the depreciation authorized by Illinois and subtracting those amounts from Illinois taxable income. The complications of documenting and tracking the differences between federal and state taxable income invariably leads to audit issues.

To further generate more tax revenue, Illinois recently amended the IITA during the spring legislative session to require affected taxpayers to add back 50% of global intangible low-taxed income (GILTI), which is calculated at the federal level. In my estimation, there are problems associated with this change without addressing the additional income in a company’s apportionment formula—but that’s a discussion for another day.

Over the years, Illinois, like other states, has made a host of other modifications to the calculation of the federal tax base, which has added further complexity to state income tax calculations.

FEDERAL TAX LAW CHANGES

So, what changes can taxpayers expect next?

H.R. 1 contains changes that’ll reduce individual income taxes at the federal level; however, it won’t affect Illinois income tax receipts because the federal adjustments are made after the calculation of adjusted gross income (the starting point for the individual income tax calculation in Illinois).

Additionally, the increases to the federal standard deduction and the special deduction for seniors that could potentially reduce or eliminate federal income tax on Social Security benefits won’t affect Illinois income tax revenues. That’s because Illinois already exempts Social Security retirement income from its income tax. The increases to the federal standard deduction are “below the line,” (after the calculation of adjusted gross income) so they don’t affect adjusted gross income.

The provisions of “no tax on tips,” “no tax on overtime,” and “no tax on auto loan interest” are all structured at the federal level as deductions from adjusted gross income. In other words, these are also “below-the-line” deductions that don’t affect adjusted gross income.

The increase in the federal state and local tax (SALT) cap deduction (from $10,000 to $40,000) is also a “below-the-line” item. One of the components of the SALT cap deduction is property taxes. In some states, the amount of the state property tax deduction is tied to the amount of the federal deduction. In those states, the federal SALT cap can limit the state property tax deduction. Illinois has a property tax deduction, but that deduction is 3% of the property taxes paid on a personal residence. As a result, the Illinois deduction is unaffected by what happens at the federal level.

Importantly, there are some changes in H.R. 1 that’ll flow through to Illinois (unless Illinois decouples). Some of these include:

• The new qualified production property deduction for manufacturing [IRC Section 168(n)].

• Research and experimentation cost recovery, which will return to the immediate expensing authorized prior to 2022 (IRC Section 174).

• Small business expensing, which will increase from $1 million to $2.5 million, with subsequent inflation adjustments (IRC Section 179).

However, based on history and the fact that Illinois is facing state budget challenges, I wouldn’t be surprised if the Illinois Department

of Revenue introduces legislation to decouple from some or all of these changes.

As I previously mentioned, the IITA was amended for taxable years ending on and after Dec. 31, 2025, to add back 50% of the amount of GILTI received under IRC Section 951A. However, H.R. 1 changes the GILTI to a new net controlled foreign corporation tested income regime. In the interest of brevity (a word some might think isn’t in my lexicon), I won’t go into the specifics of these changes. But it appears that for tax years beginning after Dec. 31, 2025, the IITA will need to be amended to address this federal change.

Also, let’s not forget that, as noted above, H.R. 1 retains the SALT cap deduction limitation, along with increasing the cap from $10,000 to $40,000. As a workaround to this, Illinois adopted legislation that allows for a pass-through entity tax (P.A. 102-0658). However, because the federal SALT cap was scheduled to sunset at the end of this year, the Illinois legislation was drafted to apply only to tax years beginning prior to Jan. 1, 2026. In anticipation of legislation extending the federal SALT cap, legislation was introduced in Springfield this spring (House Bill 2702 and Senate Bill 2021) to eliminate the sunset date. Neither bill passed during the spring session, but I hope there’ll be further consideration during the fall veto session.

While the future of Illinois income taxes is difficult to predict, one thing is clear—they won’t get any easier. I anticipate that we’ll continue to see more efforts at the state level to decouple from any federal changes that could threaten Illinois’ tax revenue. For now, the only certainty we have is uncertainty.

insights from the profession’s influencers

Joseph ‘Joe’ F. Bigane III, CPA

Driven by a passion for solving problems and making meaningful connections, this Illinois CPA Society Lifetime Achievement Award winner has built a distinguished tax career.

BY AMY SANCHEZ

Where most see problems as obstacles—something to run from, delegate to others, or escape—Joseph “Joe” F. Bigane III, CPA, sees them as fuel for his engine. He’s made a long career as a state and local tax (SALT) expert doing the work others shy away from, not by claiming to have all the answers but by committing himself to uncovering them.

“Most of the tax projects I work on are run of the mill—I’ve done them before. But others I get to sink my teeth into,” Bigane notes. “Those are the kinds of things that, on a periodic basis, keep my motor running.”

Bigane’s enjoyment in untangling complex tax issues can be tied back to his earlier pursuit of wanting to practice law: “In high school, I thought I was going to be a lawyer, so I went to my father’s cousin who was a magistrate in Illinois, and he suggested I study political science and accounting as a way to prep for law school. I enrolled in both and hated political science, but I loved accounting—I just kind of took to it.”

Bigane looked for work during college related to the accounting field and stumbled into a brief stint at a currency exchange preparing tax returns, followed by a part-time role at the accounting firm serving his father’s business.

Although his plan was to go to law school, Bigane found himself drawn in a different direction. After graduating college, he decided to pursue a master of science in taxation: “To me, tax was the closest thing to practicing law without being a lawyer.”

While pursuing his masters, Bigane was still working at the accounting firm when a specific case came across a colleague’s desk that piqued his personal interest. A notice from the state of New York was sent to the attention of Bigane’s cousin. At that time, partners all over the United States were getting hit hard by the state of New York for a tax regarding partnership shares.

“My cousin was a principal at the securities firm Dean Witter Reynolds, and he received a notice that basically said, ‘You’re a partner in Dean Witter Reynolds. You didn’t file a New York tax return. You owe us money.’ But I knew my cousin was a junior partner, not a full partner.”

As Bigane puts it, being new in your career has its advantages in cases like these: “When you’re just starting out, sometimes you’re ignorant, so you go to the books and read the rules. I read the rules, and in New York it says: If your income comes from being a partner, then we get a shot to tax it, and if it doesn’t come from being a partner, like any other employee in the firm, then we don’t get to tax it.”

Upon this discovery, Bigane wrote a letter to the New York State Tax Appeals Tribunal, and he won the case: “I wasn’t necessarily educated on it, but because somebody in the office had to look into it, I became that somebody.”

In 1981, Bigane moved on to join Wolf & Company LLC as a tax partner. In that same year, his law aspirations would find their way back into his life when he was admitted to practice before the U.S. Tax Court, a privilege non-attorneys are granted if they meet strict qualifications: “It allowed me to indulge in being a lawyer without being a lawyer.”

Following the firm’s merger with BKD LLP in 2014, Bigane stayed on until founding his own SALT firm, JFB Tax Consulting LLC, which he continues to lead today. He also devotes significant time to mentoring and helping others—an effort he sees as a two-way street: “At my age, I’d like to find a successor—there are very few people that do what I do.”

Beyond mentoring future leaders, Bigane also spends time giving back to the profession through his active volunteerism and tax committee work with the Illinois CPA Society. His decades of service were recently recognized through the Society’s 2025 Lifetime Achievement Award—an honor he hopes inspires others to get involved: “Interacting with people in your profession that you don’t necessarily know makes your career that much more enjoyable.”

Ultimately, it’s those relationships—and the thrill of finding unexpected answers—that keeps Bigane going the distance after all these years: “If all you did every day was fill up your gas tank, get into your car and drive, after a period of time, you wouldn’t look forward to taking the drive. But if every now and then you go on the racetrack where you can drive 180 miles per hour, well, that’s a drive to look forward to, and that’s going to keep the passion alive.”

ICPAS Member Yes

My first true introduction to extracurricular involvement began in high school when I tried to join the tennis team. I arrived at tryouts, somewhat naively, assuming others were also “trying out” the sport for the first time. It quickly became clear that I was surrounded by peers who had been taking tennis lessons since they were toddlers and were now positioned to excel in the sport.

This was a pivotal moment in helping me understand the role that early access, opportunity, and knowledge have in giving an individual a “head start” to maximizing their potential. It also instilled a powerful philosophy within me that has guided my educational and professional journey: There’s no better time to learn something than now, and it’s our collective duty to ensure that head starts become the new baseline for everyone.

When I took my first accounting class as a high school senior, I was amazed by how much there was to learn, especially on the personal finance side. It wasn’t until I started discussing my learnings at home with my family that I realized I was a beneficiary of immense privilege: My parents had a foundational understanding of financial literacy and could answer my questions about topics like mortgages and compound interest.

Little did I know, I was my own version of that “toddler” attending a tennis lesson—except, instead of tennis, I was someone who had been given a head start in financial literacy. Between my high school accounting teacher and my family, I had the resources to build my personal finance knowledge and skills from an early age.

Having that realization became a driving force throughout my educational and professional journey, deeply influencing my career

path and community involvement. After high school, I became a strong advocate for accounting education and shared my recommendations for improved accessibility to the profession as a student panelist at an AICPA conference. In college, I became interested in a consulting career and completed an impactful project for a nonprofit health care organization.

Fast forward to today, I volunteer with the financial literacy-focused nonprofit Junior Achievement and lead a skills-based volunteering program at my firm in Chicago.

As certified public accountants (CPAs), we have undergone extensive study, providing us with a valuable knowledge base and skill set. Therefore, it’s up to us to ensure we can expand our impact beyond client service to support our communities. There are many opportunities to volunteer with local nonprofits to help elementary through high school students build their financial literacy skills. As a young professional, I’m especially aware of the unique position I’m in to be able to better connect with students and explain complex financial topics in an understandable way.

Our collective expertise as CPAs extends far beyond traditional client service. It can bridge gaps in access, opportunity, and knowledge, serving as a powerful tool to transform lives and strengthen our communities. My experiences have shown me that by actively engaging in volunteerism and sharing our specialized skills, we can go beyond providing head starts. We can build a future where everyone’s starting line is a place of equitable opportunity.