MACPA Statement // Winter 2021

STATEMENT MACPA’S

WINTER 2021

Maryland takes global stage as Tom Hood, BLI join AICPA team MACPA’s leadership team, mission remain focused on helping Maryland CPAs thrive Page 4

ALSO INSIDE The ABCs of leadership in crisis Page 9

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CONTENTS Winter 2021 | Maryland Association of Certified Public Accountants, Inc.

CHAIR’S COLUMN.............................................................................. 2 FEATURES Maryland takes global stage as Tom Hood, BLI join AICPA team........................ 4 The ABCs of leadership in crisis............................................................................ 9

DEPARTMENTS News & Views...................................................................................................... 13 Diversity & Inclusion............................................................................................ 27 Business & Industry.............................................................................................. 31 Tax Corner............................................................................................................ 35 High-Tech Solutions............................................................................................. 41 From Our Partners............................................................................................... 43

MEMBER NOTES................................................................................ 48 CLASSIFIEDS........................................................................................... 48 MEMBER SERVICES Lauren Baker Sydney Glen PEER REVIEW

2020–2021 BOARD OF DIRECTORS Avonette Blanding, CPA Chair

Cora Edwards

Lexy Kessler, CPA Vice Chair

E-LEARNING

Herbert J. Geary III, CPA, CGMA Secretary/Treasurer

Emily Trott SEMINARS/CONFERENCES Cyndi Powers SPONSORSHIP / ADVERTISING SALES Amy Puente Krislyn Suljak

Ray Speciale, CPA, Esq. Immediate Past Chair Christine Aspell, CPA Pat Byer, CPA Tricia Griffis, CPA Leon Katznelson Tim Samuel, CPA Richard C. Stang, CPA, ABV, PFS Thomas White, CPA, CGMA Jeff Wilson II, CPA, PFS, CFE, CGMA, CDFA

SENIOR STAFF Jackie Brown CEO Skip Falatko, CPA CFO Bill Sheridan, CAE CCO Rebekah Brown, CPA Director of Development Mary Beth Halpern Director Technical Services/ Regulatory Affairs Dee Sullivan Director of Learning

WE WANT TO HEAR FROM YOU! See below to submit content Bill Sheridan | MACPA Dulaney Center II 901 Dulaney Valley Road Suite 800 Towson, MD 21204 FOR CONTENT SUBMISSION: bill@macpa.org feedback@macpa.org TO ADVERTISE IN THE STATEMENT: krislyn@macpa.org P: 410.296.6250 F: 410.296.8713 Toll free: 800.782.2036 The MACPA reserves the right to edit all submissions for grammatical style and / or length. Statement of fact and opinion are made by the authors alone and do not imply an opinion on the part of the officers or members of MACPA. The Statement is published four times a year by the Maryland Association of Certified Public Accountants, Inc. Bill Sheridan, Editor Krislyn Suljak, Advertising Sales

WINTER 2021

CHAIR’S COLUMN As a new MACPA era begins, we need your collective power more than ever BY AVONETTE BLANDING, CPA / CFO, MARITIME APPLIED PHYSICS CORPORATION You might have heard the news by now: After 24 years as our fearless leader, Tom Hood is leaving the Maryland Association of CPAs. Tom has joined the Association of International Certified Professional Accountants as its executive vice president of business growth and engagement. In addition, the Business Learning Institute — the MACPA’s training affiliate — has been acquired by the Association, which will take the BLI’s critical work of helping organizations train their employees to meet ever-changing market demands and expand it on a global scale. You’ll find details on Page 4. At first glance, you might think this is bad news. After all, Tom has been the face of the MACPA for nearly a quarter-century, and he is routinely identified as one of our profession’s most influential people. And the BLI has been the MACPA’s competitive advantage in the training market since it was incorporated in 2002. On the contrary, though, this is amazing news for the MACPA and its members, for a number of reasons. • The vision that Tom and the BLI team created in Maryland — helping accounting and finance professionals become future-ready — will now expand globally, thanks to the Association’s reach and resources. • The MACPA will remain laser-focused on its mission of Connecting, Protecting, and helping Maryland CPAs Achieve success. Driving that mission forward will be a leadership team that remains largely unchanged and features decades of experience, knowledge, and commitment to Maryland’s accounting and finance profession. • As part of the arrangement, the MACPA also will receive both an immediate injection of cash and future revenue streams that will be used to help members thrive in a changing and complex world. • Jackie Brown, who has spent the past 40 years as part of the MACPA team and has served as its chief operating officer for the past 23 years, will succeed Tom as the MACPA’s CEO. Her promotion provides the MACPA with a muchneeded sense of familiarity and stability as Hood departs.

As an added bonus, Tom isn’t really going anywhere. True, he’ll no longer be employed by the MACPA. But he will remain an active and dedicated MACPA member and volunteer, and that’s reassuring to those of us who know him and value his experience, wisdom, and insights. It will also be critically important each spring during the Maryland General Assembly’s legislative session. In January, Tom led an unprecedented version of CPA Day, the MACPA’s signature legislative event. The traditional name of the event is “CPA Day in Annapolis,” but we had to drop the “in Annapolis” part of that title this year, for obvious reasons. Thanks to the pandemic, we turned it into a virtual event, and while we missed the opportunity to be with all of you in person, there were definite benefits of going virtual this year — the main one being that we easily broke our CPA Day attendance record this year. Nearly 600 Maryland CPAs joined us online, including more than 300 first-time attendees. As Tom likes to say, the more members who join us for this event, the louder our profession’s legislative voice becomes, and this year, I assure you, our voice was louder than it has ever been! The word “unprecedented” gets tossed around a lot lately thanks to the pandemic, almost to the point where it’s become cliche. But it certainly applies this year, not only in terms of CPA Day, but also in terms of the legislative environment in Annapolis. Our lawmakers will debate their positions this year behind masks and plexiglass. There will be no lobbyists or constituents roaming the halls of the House or Senate, and no in-person testimony in front of key committees. So we’ll roll with the punches, and we’ll work to protect our profession, our clients, and our state within the confines of these new pandemic-related rules. It’s what the MACPA has done for the past 120 years, and it’s what we will continue to do. The “P” in CPA stands for “Public,” and our job is to protect that public. Part of that job is to support or oppose proposed legislation based on its financial merits, and that’s what makes the work of Tom and the rest of our legislative volunteers so critical.

Through their connections and the relationships they have built over the years, Tom and the MACPA’s legislative team brought a number of Maryland’s high-ranking legislative leaders to this year’s virtual CPA Day, including Senate President Bill Ferguson; House Speaker Adrienne Jones; Sen. Guy Guzzone, who chairs the Senate’s Budget and Taxation Committee; and Sen. Brian Feldman, himself a CPA and an MACPA member. That’s yet another example of the power of relationships. Through its networks and connections, the MACPA has been able to not only bring lawmakers’ messages to our members, but to also build relationships that give Maryland CPAs a seat at the legislative table -- to give voice to our issues and concerns. Few other things the association does are as important. And few other people do it as well as Tom Hood. The MACPA team and volunteer leaders will miss his leadership terribly, but we are ecstatic that he continue to support the MACPA and the CPA profession and Maryland by providing counsel in a number of critical areas, particularly on the legislative front, where he expects to play an ongoing role in the association’s efforts to protect the profession in Annapolis and Washington D.C. We hope you will join him and the rest of the MACPA’s legislative volunteers in that effort. Here’s how you can help: • Attend an upcoming MACPA town hall meeting: These meetings are where we will educate you about the issues that are impacting you and your clients, so you’ll be able to let your legislators know how the profession feels about these issues. Watch the MACPA website for a schedule of upcoming meetings. • Respond: When we send you an e-mail that says we need you to contact your senator or delegate and pass along a message about a particular issue, do it immediately. Again: The more CPAs who participate in this process, the stronger our voice becomes. • Make sure your online MACPA account is updated with your home address so we can match you accurately with your legislators. We need the collective power of our profession. There is strength in numbers. Let’s show it now. STATEMENT

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Maryland takes global stage as Tom Hood, BLI join AICPA team MACPA’s leadership team, mission remain focused on helping Maryland CPAs thrive

B Y B I L L S H E R IDA N , CA E For Tom Hood, the Business Learning Institute, and the Maryland Association of CPAs, a new era has arrived. Hood, who has served as president and CEO of the MACPA for the past 24 years and is widely recognized as one of accounting and finance’s most influential figures, has joined the Association of International Certified Professional Accountants (or the Association) as its executive vice president of business growth and engagement. He will report to AICPA CEO Barry Melancon. In addition, the Association has acquired the Business Learning Institute, the MACPA’s training affiliate, to help organizations worldwide upskill and reskill their employees so they can continue to meet ever-changing market demands. Together, the Association and the BLI will accelerate the introduction of new, innovative content for accounting and finance professionals globally. “I am excited to join Barry and his team to continue making accounting and finance professionals and CPAs around the world even more future-ready and able to thrive in a globally volatile, uncertain, complex, and ambiguous world,” Hood said. “The BLI team is looking forward to coming together as part of the Association to leverage our combined strengths, reach and scale.

“At the same time, I will look back proudly on the great things the MACPA has accomplished, the differences we’ve made, and the countless friends I’ve made along the way. I will never forget the mark that the MACPA has had on my career and development, and the great people whose shoulders I stand on as I move on to help our global profession with the Association.” “Tom’s vision and mission to help finance and accounting professionals grow in a changing business environment is well aligned with the Association’s goals of powering trust, opportunity and prosperity for members, students, the profession and those they serve. He brings energy, insight, enthusiasm and a unique ability to facilitate connections,” Melancon added. “Tom will add value to our engagement with businesses and the accounting and finance professions, increasing our understanding of the challenges they face and how to best meet their needs.” Jackie Brown, who has spent the past 40 years as part of the MACPA team and has served as its chief operating officer for the past 23 years, will succeed Hood as the MACPA’s CEO. Her promotion provides the MACPA with a much-needed sense of familiarity and stability as Hood departs. STATEMENT

“I speak for our entire team when I say how #MarylandCPAProud we all are of what Tom has done — and will be able to do now — for the global profession,” Brown said. “I’m also confident that the team we’ve developed in Maryland is ready to take the ball to make him proud, too.” “Jackie has been a fixture at the MACPA for decades, and she is ready to make the leap from COO to CEO and continue to help MACPA members thrive and become future-ready,” said Avonette Blanding, chair of the MACPA’s 2020-21 Board of Directors. “I’m excited about the future of the MACPA and the profession!” MACPA: FAMILIAR FACES, SAME MISSION Though Hood and the BLI have departed, little else will change for the MACPA. Its mission — to Connect, Protect, and help Maryland’s accounting and finance professionals Achieve success — continues to be its primary focus. The MACPA’s leadership team also remains largely intact, consisting of talented professionals who have served the profession for decades in their respective roles. They include: • Technical Services and Regulatory Affairs Director Mary Beth Halpern, now in her 30th year with the MACPA. • Finance Director Skip Falatko (21 years). • Controller Laura Swann (21 years). • Chief Communications Officer Bill Sheridan (21 years). • Director of Learning Dee Sullivan (21 years). • Director of Development Rebekah Brown (nine years). Each member of the MACPA’s leadership team is also building his or her own succession plan to ensure a smooth leadership transition when the time comes. And though the MACPA will no longer own the Business Learning Institute, it will still be powered by BLI learning. The MACPA will continue to deliver BLI programs to Maryland CPAs, CPA firms, and corporate employers and will benefit from the Association’s ability to offer BLI learning on a global scale. Meanwhile, the BLI and its stellar team of thought leaders and course authors will remain committed to delivering the skills that accounting and finance professionals need in an environment marked by exponential change. The BLI’s leadership also will have a familiar ring to it. Hood, who helped create the BLI in 1999, will continue to provide leadership in supporting clients and the BLI’s products and services through its integration with the Association. And Pamela Devine, who has served for years as director of learning and development for both the MACPA and the BLI, will continue in that role with the new BLI. She will be joined by select members of her MACPA team. “The MACPA will benefit from this deal in terms of immediate cash and future revenue, which we will use to help our members become future-ready,” Hood said. “The BLI was created with that mission in mind — to help the profession become future-ready, but with a Maryland-first mindset.” THE PROFESSION’S FUTURE STARTS IN MARYLAND The MACPA also will expand its role as a training ground for the profession’s next generation of national and international leaders. Kimberly Ellison-Taylor, who served as the first Marylander to chair the American Institute of CPAs’ Board of Directors in 2016-17 and is consistently ranked among the most influential people in the profession, started her leadership path in the profession as chair of the MACPA’s 2010-11 Board of Directors. Former MACPA Chair WINTER 2021

“I speak for our entire team when I say how #MarylandCPAProud we all are of what Tom has done — and will be able to do now — for the global profession. I’m also confident that the team we’ve developed in Maryland is ready to take the ball to make him proud, too.” — Jackie Brown, Deputy Executive Director, COO Anoop Mehta also has been confirmed as an incoming AICPA chair. His term will run from June 2022 to May 2023. The MACPA is also one of the profession’s leading voices for diversity, equality and inclusion. Maryland has played an important role in advancing diversity in the CPA profession and in state society and AICPA leadership, including: • The first Black state society chair, Graylin Smith in 2002. • The first Hispanic state society chair, Marianela del Pino Rivera in 2014. • The first Indian American state society chair, Mehta in 2012. • The first Black Maryland State Board of Accountancy chair, Benjamin King Sr. in 1969. • The first Black AICPA chair, Ellison-Taylor in 2016. Other former MACPA chairs — including Blanding, Raymond Speciale, Samantha Bowling, and Byron Patrick, among others — have carved out niches for themselves throughout the profession in areas such as artificial intelligence, diversity and inclusion, compliance, and the future of work. That proud work will continue after Hood’s departure. CONTINUED ON PAGE 6

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A LEGACY OF LEADERSHIP Still, Hood’s efforts on behalf of the MACPA and its members will be missed. Almost from the start, he worked tirelessly to expand the MACPA’s profile and brand and advance the mission of accounting and finance professionals throughout the world. After being named the MACPA’s president and CEO in January 1997, Hood immediately volunteered to help lead the CPA Vision Project, a nationwide grassroots effort to map the future of the profession and the skills CPAs would need to thrive going forward. The final Vision Project, published in 2011, identified those

“I’m thrilled by his decision to join the AICPA and expand his reach within the profession. We will sincerely miss him, but his guidance and leadership created a team that is prepared and able to assume the reins.”

future-ready skills as communications and leadership; strategic and critical thinking; a focus on customers, clients, and markets; interpretation of converging information; and technology-related competencies. Hood studied that list of competencies and asked himself, “If these are the skills CPAs will need to thrive in the future, shouldn’t the MACPA be teaching those skills?” His solution was the Business Learning Institute, a training affiliate whose mission would be to provide higher-level, future-ready learning to accounting and finance professionals and CPAs in Maryland and across the country. The BLI was formed in 1999 and incorporated on Jan. 7, 2002. Hood’s focus, however, went well beyond the future of learning. • He has helped the MACPA to not just survive but thrive in the wake of numerous economic downturns, including those that followed the Sept. 11, 2001 terrorist attacks, the 2002 Enron and WorldCom scandals, the 2008 housing crisis and the recession that followed, and the 2020 COVID-19 pandemic. • He has helped build the next generation of CPA leaders as the principal instructor for the MACPA and AICPA Leadership Academies. • He has been focused solely on leading our profession, Maryland first, in transforming the world and making a positive impact. • He has been driven to Connect members, Protect their interests, and help a CPA-led profession Achieve success.

— Avonette Blanding, chair of the MACPA’s 2020-21 Board of Directors

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His new role with the Association isn’t the end of Hood’s work with the MACPA, though — far from it. As a Maryland CPA and an MACPA member, he will remain an active volunteer, providing counsel to its team and leadership in a number of critical areas, particularly on the legislative front, where he expects to play an ongoing role in the MACPA’s efforts to protect the profession in Annapolis and Washington D.C. “Tom is also a great teacher, mentor, and leader,” Blanding said. “I’m thrilled by his decision to join the AICPA and expand his reach within the profession. We will sincerely miss him, but his guidance and leadership created a team that is prepared and able to assume the reins.” LOOKING FORWARD In his new role with the Association, Hood will use his extensive connections, influence, experience, and passion for the accounting and finance profession to engage with businesses, their leaders, and their global networks. Hood will convert those insights into actions that support these professions and work across the Association to grow its understanding of their challenges and opportunities. Another focus of Hood’s role will be partnering with Andrew Harding, FCMA, CGMA, the Association’s chief executive of management accounting, to further professionalize management accounting and support professionals in obtaining their Chartered Global Management Credential credential in the Americas. This includes the digital-first Finance Leadership Program, an online learning program that teaches candidates the finance, business, people and leadership skills needed to succeed in finance teams of the future. Meanwhile, Brown and the rest of the MACPA team are looking forward to continuing the work to which Hood has devoted the past 24 years — helping the profession thrive and become more future-ready in a changing and complex world.

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As a Maryland CPA and an MACPA member, he will remain an active volunteer, providing counsel to its team and leadership in a number of critical areas, particularly on the legislative front, where he expects to play an ongoing role in the MACPA’s efforts to protect the profession in Annapolis and Washington D.C. “I am confident in the MACPA and our leadership team under Jackie Brown’s direction,” Hood said. “She is critical to Maryland’s current and future success, and I look forward to celebrating the association’s successes under her watch.” “Tom’s job has changed, but our work has not,” Brown added. “We remain focused on helping Maryland CPAs thrive in a world of exponential change. That’s our purpose, our passion, and the reason this association exists, and we’re proud to carry Tom’s legacy forward.” Bill Sheridan, CAE, is editor of The Statement and chief communications officer of the Maryland Association of CPAs.

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The ABCs of leadership in crisis BY EMMANUEL GOBILLOT Note: The following article was written by international leadership expert Emmanuel Gobillot. It is reprinted here with permission. Leadership: To create the conditions that ensure the positive engagement of others with a goal. Crisis: From the Greek for “decision,” crises are times of intense shock responses to conditions that will define your ability to survive. However experienced you are at leadership, crises — whether local or global, big or small — are difficult as they completely redefine the climate you operate under. They are tests to your ability to remain steady and decisive. The default position in crisis is one of control (the more out of control we feel, the more we want to regain it), when in fact the only way to get through a crisis is to ensure the steady flow of information from all parts of the system to ensure decisions are made with full information. This means that rather than control, success can only come from redoubling your efforts to gather discretionary effort (i.e. positive

engagement) rather than simply gaining compliance (i.e. simply follow orders). The balancing act between necessary compliance and needed engagement is difficult to achieve, which is why I have come to rely on the three core principles and eight tactical interventions below. It is also important to remember that, as human beings, leaders are not immune to the impact of crisis on their own psyches. For this reason, at the top of this piece I should reiterate the ancient proverb “physician, heal thyself.” To be effective as you implement interventions, you will first need to redouble your efforts at selfawareness and self-management, as well as to ensure self-care. The ABC model tells you the principles you need to apply while the mnemonic CHARISMA gives you clues as to the tactics to use for each area. Remember, though, that while the presentation of the model might be linear, its

application isn’t. You may need to go from A to C and back to B, and you certainly will need to go around all three multiple times as circumstances change. Crisis leadership is about decisiveness and consistency, but it is also about adaptation. Danger comes from doggedly sticking to failed tactics in the face of changing circumstances. A IS FOR ‘APPRECIATE WHERE PEOPLE ARE AT’ The reason I use CHARISMA as a mnemonic is that no one is born with charisma. It is a gift your followers look for and bestow upon you, especially in times of crisis if you manage to create the necessary conditions for them to release their discretionary effort. This is why we need to start with appreciating where our followers are at. Nothing can be achieved without an understanding of their needs and wants, as well as hopes — where are they now and where will you take them. This requires two key elements — compassion to understand and hope to drive forward momentum. CONTINUED ON PAGE 10

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1. Compassion Compassion is different from empathy and sympathy. It is active rather than reflective. Knowing how people feel is insufficient, and feeling as they do is counterproductive. Compassion is about followers feeling that you “get them.” You are neither detached nor aloof. As followers, we do not want you to be “one of us,” we need you to be “a better, and hopefully the best, version of us.” Having compassion is about listening and thinking. Listen to the unsaid as well as what is being said. Listen to the mood music rather than just the notes. Think deeply about what this means for the actions you will take and how you will articulate these. Proximity to your followers is key at a time when the demands on your time and the need to isolate yourself in meetings with experts will be unprecedented. Your aim is not to be liked; it is to have your leadership respected. Being liked means refusing to make the tough calls. Compassion is about making the decisions that matter to make people stronger and more capable, rather than happy. That being said, remember that compassion can also be as simple as saying, “Thank you.” 2. Hope Hope is not blind optimism. It is about a shared goal plus the will and the way to achieve it. Giving hope is, therefore, about knowing the goal to articulate, sharing insights on the actions taken, and demonstrating the willingness to take them. Followers want to know their leader is willing and ready to lead them to a better place. Achieving this can be as simple as being present and available. Call around to support, make yourself available to listen, and reiterate your willingness to help, as well as your call to action (see B). As the crisis unfolds, followers look for steadfastness of goals rather than action. If you must change the goal, rely on your compassion and B to ensure the new one is understood and shared.

Compassion and hope do not equate to doing whatever your followers think they might need. It is why I reminded you at the start about the etymology of crisis. You have to make decisions. Being decisive is the essence of leadership in crisis. You will ask questions and get multiple answers. Every expert will have a valid perspective, but one rooted in their specific area. As a leader, your role is to take these multiple perspectives (be they economic, medical, operational, etc.) to shape a strategy. The leadership act of engagement, however, is to ensure this strategy is seen by followers in light of their fears and goals. You cannot look up to your followers for answers or look down on them because of their lack of appreciation of complexities that you alone see because of your greater access to information. There is no right or wrong emotional reaction to a crisis. To understand others’ perspectives, you must look forward with them and articulate the goal in a way that resonates within their context. B IS FOR ‘BROADCAST TO THEM’ Words are critical tools of leadership. In crisis, communication is key. Often people think there is no such thing as too much communication in crisis. That’s not true. But there can never be too much of the right kind of communication. Communicating helps mobilize, but only if done right. Done wrong, it amplifies the crisis. To create the right broadcast (i.e. one that amplifies the right message and helps others know what to do when you are not in the room), use the following four tactics. 3. Accurate The more uncertain the environment is, the more certainty people crave. The more fearful they are, the more reassurance they seek. In this context (and given the hope we seek to provide), it would be expedient to say whatever we believe people need to hear. This is a mistake, as it would diminish your credibility as events unfold. Statements made need to be accurate.

Having compassion is about listening and thinking. Listen to the unsaid as well as what is being said. 10

This is not always easy, as the advice you get may be contradictory. There are two solutions to this which need to be used in conjunction with each other. Explain the contradictions and the nature of the decision you have made in the face of these. Clearly describe your intent. You may (and probably will) make mistakes, but you will be judged on your intent that you will and your ability to maintain a consistent message on the goal. 4. Rhetoric Aristotle’s rhetorical modes of persuasion are even more important in times of crisis. • Ethos: The appeal through authority will reinforce your message. Use the experts around you. Expertise provides reassurance. • Pathos: The appeal to emotions is key here. Use your findings in A to reinforce an emotional message. Fear is an emotion which facts won’t kill. Stories, analogies, and pictures are the only ways to address emotions. In crisis, allegories work. • Logos: Appealing through logic reinforces your authority. Use facts and figures and ensure they are accurate. Be mindful that they will change, though, and will therefore always need to be adjusted so as not to derail your efforts over time. Finally, the lesser-quoted Kayros element is particularly important in crisis. Kayros is about the time and place you use to persuade. Use formal settings for formal addresses and messages (a podium, office, or whatever in your environment signals formality). Use formal communication channels to convey importance and social ones to convey proximity. Vary the channels, but keep the message consistent. Kayros is also about frequency. Frequent contact matters but should not be overwhelming. The preference should be to keep a consistent frequency. Think of it as the tempo of communication. Rhetoric is your main weapon against fear to promote discretionary effort. 5. Integrity Integrity here simply refers to the alignment of thoughts, words, and deeds. As a leader, you will have to make choices and, at times, you may well feel that full disclosure is likely to create more issues than it solves. It is fine to filter news, but lying by intent or omission in answer to questions STATEMENT

from followers is likely to damage your ability to release their discretionary effort in the long run. This means you have to make choices carefully about your words in the full knowledge that people have an amazing ability to detect falsehoods. Do not ask others to do things you will not do yourself or make sacrifices you are not prepared to make yourself. This will only damage your message, unless you acknowledge you are not doing them and explain the necessary reasons why. This alignment will ensure you create resonance by avoiding any hint of incongruence that will, in turn, only provide followers an opportunity to question the validity of your message. 6. Simplicity Simple is not the same as simplistic. In crisis, things are complex. Crises are defined as such primarily because they are systemic. Recognizing this is key to solving them. For this reason, it would be counterproductive to oversimplify. Making things simplistic is reducing the number of parts below the minimum required to understand the issue. It is over-subtraction. Making things simple rather than simplistic is subtracting the unnecessary and superficial and making the rest coherent. In your communication, you do not have to explain every part, but you do have to make sure people understand the whole. Take all the parts that go into your decisionmaking and build a story that helps others understand. The key is to ensure your communication goes right to the heart of what is important. It is to ensure the navigation of the problem is intuitive. There will be a lot of information coming your followers’ way, so make sure your message sticks and spreads by making it memorable and easily repeatable. Before you communicate, think about what you want others to think, feel, say, and do as a result of your intervention and this around these insights. Broadcasting is about making sure your voice is louder than the anxiety the crisis creates, but remember the old adage: Actions speak louder than words. This is where the third principles comes into play. C IS FOR ‘CREATE THE FUTURE TOGETHER’ If appreciating where people are and broadcasting to them is about enabling WINTER 2021

In your communication, you do not have to explain every part, but you do have to make sure people understand the whole... The key is to ensure your communication goes right to the heart of what is important. you to engage them in the release of their discretionary effort, creating the future is about ensuring that the release of their effort is sustainable and sustained throughout the crisis resolution. 7. Milestones / measures / markers There are two timing issues in the mind of anyone in a crisis: (1) When will this be over, and (2) Are we making progress toward resolution? The more the former is difficult to answer beyond an approximation, the more important the latter becomes. Unlike previous tactical elements, I have used three words to describe this one, the choice of which will depend on the crisis you face. If your crisis is timed and bounded (i.e. you know what to do to get over it with an element of certainty as to the solutions’ efficacy), then describing a sequence of milestones will help you describe the road ahead. When faced with a crisis in which remedies can be identified but their efficacies over time are harder to predict, then describing a sequence of measures to be taken is the best way to ensure followers regain a feeling of control over events. In a systemic crisis when remedies are multiple, their efficacies unknown, and their adoption likely to be fluid, you should aim to identify markers of progress. In his famous “I Have A Dream” speech, Martin Luther King Jr. outlined each of the above, but in particular he specified some powerful markers “that my children will one day …”, “that one day in Alabama …” Taking elements of a crisis and outlining their reversal not only reinforces the goal that is the source of hope, but enables progress to be tracked. 8. Actions In this context, actions don’t refer so much to what generally needs to be done (this is an operational rather than a leadership imperative), but rather what you, as a leader, will do to set the example.

A leader is always watched. This is both a curse and a gift. It’s a curse in so far as you are always under a microscope and the smallest misstep is amplified. But it is also a gift since the smallest thing you purposely change can have large repercussion on the habits and behavior of the system. In a crisis, you must become even more aware of the impression your actions will leave on others. Symbols matter more than ever, so think about the symbolic actions you can take to encourage (i.e. literally give courage, in this context) your followers. Your actions will speak louder than you, which is why you will have to speak twice as often and twice as loud than usual. Again, remember that this model is neither linear nor cyclical. Life is messy, and so is leadership in crisis. But by ensuring each of the above elements is taken into account through your leadership, you will gain the discretionary effort of your followers so necessary for success. Finally, in my experience, it can be hard for leaders in tough times to find an avenue to express their fears and doubts, or simply to ask questions, as they do not want to portray what they see as weaknesses or do anything which might instill doubt in their followers. For these reasons, as usual my email is open should you ever want to reach out. Given current recommended advice about social distancing, I am at home, so I am able to answer quickly and can easily jump on a call, so please, if there is anything at all I can do to support you — even if it’s just listening — don’t hesitate to contact me. I am here for you. Described as “the first leadership guru for the digital generation,” Emmanuel Gobillot has more than 15 years of experience in helping organizations and audiences globally rethink the way they build and run organizations.

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NEWS AND VIEWS CPA Day 2021: Bigger — and stranger — than ever CPAs shatter attendance record as pandemic forces signature MACPA event to go virtual for first time ever BY BILL SHERIDAN, CAE their positions this year behind masks and plexiglass. There will be no lobbyists or constituents roaming the halls of the House or Senate, and no in-person testimony in front of key committees — and obviously, no large, in-person gatherings like the one we CPAs look forward to each January.

A 2021 legislative session unlike any in the Maryland General Assembly’s history opened with a CPA Day unlike any the MACPA’s legislative team has ever held. The Jan. 21 event was held virtually for the first time ever, allowing nearly 600 Maryland CPAs to participate. That number easily shattered the CPA Day attendance record and included more than 300 first-time participants. “The more members who join us for this event, the louder our profession’s legislative voice becomes,” said Avonette Blanding, CPA, chair of the MACPA’s Board of Directors. “Today, I assure you, our voice is louder than it has ever been.” The COVID-19 pandemic drove the signature MACPA event into a virtual environment this year, and it’s leaving its mark once again on Maryland’s General Assembly. Last spring, the virus forced Maryland’s legislative session to close three weeks early — the first time the session has ended prematurely since the Civil War. This year, as the number of cases remains high throughout the state, lawmakers have announced that members of the

public, activists, and lobbyists will have no access to the State House, hearing rooms, or legislative offices. The Senate and House of Delegates chambers likewise will be off limits.

“So we’ll roll with the punches,” she added. “We’ll work to protect our profession, our clients, and our state within the confines of these new pandemic-related rules. And we’ll succeed, thanks to all of you. It’s what the MACPA has done for the past 120 years, and it’s what we will continue to do.” Those efforts will look significantly different this year. Association members will have to deliver the profession’s position on issues of importance without having physical access to their lawmakers. It sounds constricting, but MACPA President and CEO Tom Hood said the restrictions might actually play to the profession’s advantage.

“Anyone else who wants to watch the legislative sessions, where bills are introduced and final debates and votes are held, will have to tune into a video stream on the General Assembly’s website,” The Baltimore Sun reported. “... Committee hearings — where much of the legislative work is done — and committee voting sessions will be held via video meetings and streamed online.”

“Imagine if 1,000 — or I’d love all 8,000 of our members to do this — but imagine if they all sent an e-mail to their legislators telling them which issues we care about, and then said, ‘Oh, by the way, I’m a CPA in your district.’ Wow, what that would do,” Hood said. “Then, when we have a big issue come up in a committee or on the House or Senate floor, we could ask our members to reconnect with their legislators on those committees and reinforce our position. That’s how we could be even more formidable than if we did it in person.”

“We’ve never seen a legislative session like this before,” Blanding told MACPA members. “Our lawmakers will debate

And what are the issues we’re following this year? Hood breaks them down as follows: CONTINUED ON PAGE 14

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• Sales taxes on professional services: This was one of the MACPA’s biggest victories in 2020, and it remains a huge risk in 2021. The state has spent a huge amount of money on COVID-19 relief. Lawmakers will want to recoup that money. How will they do it? Sales taxes on professional services — like those that CPAs provide — will be attractive options that lawmakers will consider. We will oppose all efforts to tax these services. • Stop onerous data privacy legislation: The MACPA will oppose efforts to legislate data privacy that are similar to the European Union’s General Data Protection Regulation and California’s similar Consumer Privacy Act, which are “onerous and costly for employers to implement,” Hood said. “We love the idea of privacy and security of data. We just think this is the wrong way to go about it.” • Professional licenses: The MACPA will aggressively oppose efforts to weaken or eliminate professional licensing boards, a deregulatory risk that has arisen in several other states recently. • Tax issues: MACPA volunteers also will be closely monitoring legislation related to Maryland tax policy and offering our insights as needed. In particular, we will support technical corrections related to last year’s Senate Bill 523, “Income Tax – Pass-Through Entities and Corporations.” • Stop onerous COVID-19 employer / business regulations: If you, as an organization, follow all state and federal guidelines for keeping your employees healthy, should you be liable if one of your workers becomes ill? We would say, “No.” Virginia passed an aggressive employer / business COVID19 regulation which includes fines of up to $130,000. This increases the risk of frivolous claims against employers, which should not be allowed if the employers follow Maryland and federal guidance. We would oppose any legislation that could fine employers if their workers fall ill, even if those employers followed all recognized guidelines for employee health and safety. Likewise, we would support legislation that prevents employees from suing organizations that followed all recommended state and federal protocols.

“Make sure your online MACPA account is updated with your home address so we can match you accurately with your legislators. We need the collective power of our profession. There is strength in numbers. Let’s show it now.” — Tom Hood, CPA,CITP, CGMA, President and CEO of MACPA/BLI Related to the notion of opposing onerous COVID-19-related regulation, the MACPA is supporting Senate Bill 210, “COVID-19 Claim — Civil Immunity.” The proposal would stipulate that businesses, educational institutions, and health care facilities that act in compliance with all federal, state and local statutes, rules, regulations, and executive and agency orders related to COVID19 shall be held immune from civil liability for a coronavirus-related claim unless gross negligence or intentional wrongdoing can be proven. If passed, the temporary protections would apply only to claims that arose between March 5, 2020 and 180 days after the expiration or rescission of Gov. Larry Hogan’s Declaration of State of Emergency. ALREADY, SOME GOOD NEWS Good news is already trickling out of Annapolis about at least one of these issues. Del. Adrienne Jones, speaker of Maryland’s House of Delegates and a virtual guest for CPA Day, told MACPA members that sales taxes on professional services — a critical issue for the profession and the topic of the MACPA’s biggest legislative victory of 2020 — is not on the General Assembly’s 2021 radar at this point. Sen. Guy Guzzone, who chairs Maryland’s Senate Budget and Taxation Committee, agreed, telling MACPA members he is “firm in my belief” there will be no effort this year to impose sales taxes on services. That said, Sen. Brian Feldman — one of three CPAs in the General Assembly and an MACPA member — said we’ll likely see “non-traditional” efforts to raise revenue to take some pressure off the state budget,

which took a hit as a result of the pandemic — but not nearly as big a hit as initially predicted. “Many tax proposals will be introduced this year,” Guzzone added. “The good news is that Maryland is doing better financially than originally projected.” WHAT CAN YOU DO TO HELP? Hood urged MACPA members to take these steps to ensure the profession is ready to respond legislatively when needed. • Register to attend an upcoming MACPA town hall meeting: These meetings are where we will educate you about the issues that are impacting you and your clients, so you’ll be able to let your legislators know how the profession feels about these issues. Register for an upcoming town hall meeting at MACPA.org. • Respond: When the MACPA sends you an e-mail that says we need you to contact your senator or delegate and pass along a message about a particular issue, do it immediately. Again: The more CPAs who participate in this process, the stronger our voice becomes. “I need as much of your attention on this as possible,” Hood said. “Make sure your online MACPA account is updated with your home address so we can match you accurately with your legislators. We need the collective power of our profession. There is strength in numbers. Let’s show it now.” Bill Sheridan, CAE, is editor of The Statement and chief communications officer of the MACPA. STATEMENT

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NEWS AND VIEWS Three MACPA members are among Maryland’s ‘2020 Leading Women’ Three members of the Maryland Association of CPAs have been named among Maryland’s “2020 Leading Women” by The Daily Record. Those honored include: REBEKAH BROWN , CPA, director of development, Maryland Association of CPAs and the Business Learning Institute “Rebekah has become a leader in the accounting profession in Maryland,” The Daily Record writes. “She works with college students considering accounting careers, helps firms and corporations with strategic planning, and advises accounting organizations on adapting to change. As the director of development for the MACPA, Brown developed its Student Leadership Academy in 2015, a three-day program that educates college students and helps them build a professional network. She said she has mentored more than 100 students and several have gone on to become full members of the Association. She also started the association’s mentorship program, which connects seasoned CPA veterans with young professionals.”

KRISTA

HICKMAN , principal, KatzAbosch “As a principal at KatzAbosch, Krista Hickman provides client reviews, compilations, and tax returns to businesses in and those working with the construction industry,” The Daily Record writes. “With the Timonium-based firm since 2013, she is also a member of their internal Construction and Accounting and Auditing committees. She holds a bachelor’s degree in accounting and criminal justice from York College of Pennsylvania. Always willing to help out those in need, Hickman became a financial advisor for the ACE Mentor Program of Baltimore this year and has served as treasurer for the Grace United Methodist Women of Shrewsbury, Pa., for 16 years. She notes her proudest professional accomplishment to date is her ability to maintain a full-time advanced career that she loves while being an active mother and spouse.”

JESSICA

McCLAIN , controller, Brand USA For Jessica McClain, paying it forward and servant leadership is what drives her every day,” The Daily Record writes. “After working in public accounting for more than 11 years, McClain now serves as Controller for Brand USA, a multi-million-dollar nonprofit organization that works with the travel industry to maximize the economic and social benefits of travel. McClain is a CPA, a certified information systems auditor, a project management professional, and a certified government financial manager. She services on volunteer committees with the American Institute of CPAs and is a trustee for the AICPA Foundation. She is also a member of the MACPA Foundation Board and has been appointed to the Maryland 529 Board, where she serves on the Audit and Governance Committee. McClain believes no one can truly succeed alone and has made it her mission to help others reach their fullest potential.”

“Each of them is a true leader not only in her organization but in our profession as well, and I’m happy to offer our most sincere congratulations to Rebekah, Krista, and Jessica.” — Tom Hood, CPA,CITP, CGMA, President & CEO of MACPA/BLI “We are tremendously proud that the MACPA and our profession are so well represented on this year’s list of Maryland’s Leading Women,” said MACPA President and CEO Tom Hood. “Each of them is a true leader not only in her organization but in our profession as well, and I’m happy to offer our most sincere congratulations to Rebekah, Krista, and Jessica.” See the full list of Maryland’s “2020 Leading Women” at thedailyrecord.com/2020/12/01/leading-women-2020-digital-edition.

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NEWS AND VIEWS 24 MACPA connections among the CPA profession’s most influential people The Maryland Association of CPAs’ influence throughout the profession continues to grow. No fewer than 24 MACPA executives, members, thought leaders, and strategic partners have been included on Accounting Today’s annual list of “The 100 Most Influential People in Accounting.” They include: MACPA STAFF / MEMBERS • Tom Hood: The MACPA’s CEO has once again been named the profession’s second most influential person, behind only AICPA CEO Barry Melancon. “The accounting profession was deemed essential to the economy during the pandemic,” Accounting Today wrote, “and Hood is essential to the profession: as a source of constant inspiration, clear vision, practical paths forward, and unfailing hope for the future.” • Kimberly Ellison-Taylor: The former AICPA chair and Baltimore native has once again been named the profession’s third most influential person. “We have often noted Ellison-Taylor’s infectious enthusiasm for the accounting profession, but while she promotes it, she’s not blind to the areas where it needs to improve, as she proved by taking a leading role this year in pushing for greater diversity and inclusion in the field,” Accounting Today writes. • Wayne Berson: The CEO of BDO USA is a native of Cape Town, South Africa, and an MACPA member. “Almost without exception, the leaders of the largest firms in the profession were united in taking this year’s protests against racial injustice to heart, and Berson was no exception, committing to expanding BDO’s commitments to diversity and inclusion, even as he continues to grow the Top Eight firm at a doubledigit pace,” Accounting Today writes. • Jody Padar: The Chicago native is CEO and principal of the Illinois-based New Vision CPA Group. She joined the MACPA to be connected with the association’s future-focused vision and strategy. “As the ‘Radical CPA’ with her own practice, Padar has wired for years to convince accounting firms that success in the future requires technology, and in her new role with Botkeeper, she’s combining that message with artificial intelligence and other cutting-edge tools to help them ensure that success,” Accounting Today writes. • Edward Karl, vice president of tax policy and advocacy for the American Institute of CPAs. “As the ‘key interface’ between the AICPA and the Treasury Department, the IRS and Capitol Hill, Karl has always played a central role in making sure that the practitioner’s voice is heard in Washington, which was even more important that ever this year, as he influenced major decisions around moving tax filing deadlines, shaping aspects of the stimulus packages and the Paycheck Protection Program, penalty abatement, and other tax issues,” Accounting Today writes.

MACPA PARTNERS • Erik Asgeirsson, CEO, CPA.com: “2020 was supposed to be the year Asgeirsson helped lead the charge in revolutionizing the audit, but the pandemic saw him pivot to add a major role in helping accountants help their clients through the complexities of the Paycheck Protection Program, hosting a long-running series of popular virtual town halls on the subject, and working to build valuable related tools — all while keeping those audit initiatives ticking over, ready for calmer times,” Accounting Today writes. • Kim Austin, business development manager, Intuit: “Like many other members of our Top 100, Austin found her influence multiplied by the coronavirus pandemic, as she helped her firms with everything from access to files in practices suddenly working remotely, to getting their clients the PPP loans they separately needed,” Accounting Today writes. • Chandra and Sharada Bhansali, CEO, AccountantsWorld: “As early pioneers of the cloud, the Bhansalis were among the first to harness its power for accountants, starting by enabling thousands of them to offer web-based payroll, and more recently by creating accounting systems that put accountants squarely in control of their client relations,” Accounting Today writes. • Kevin Cumley, senior director, Sage Intacct Accountants Program, Sage: “Cumley has been a respected figure in accounting technology for some time, but in his role working with Sage Intacct’s accounting firm users, he’s helping create a vision for how to structure, deliver, and manage outsourced accounting services. With CAS transforming countless practices, his influence is only bound to grow,” Accounting Today writes. • Herschel Frierson, chairman, National Association of Black Accountants: “In a crucial year for race relations, Frierson is using his position as chair of the National Association of Black Accountants — established to represent the more than 200,000 Black professionals in the fields of finance and accounting — to highlight how much needs to be done, to innovate new ways to accomplish it, and to champion the dream of a more diverse, more inclusive profession,” Accounting Today writes. • Sasan Goodarzi, CEO, Intuit: “Like many of the accountants who use its products, Intuit under Goodarzi is dedicated to serving small businesses, and so he is constantly investing in new technologies and tools that will enable accountants to bring more and more value to their clients,” Accounting Today writes. CONTINUED ON PAGE 20

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NEWS AND VIEWS CONTINUED FROM PAGE 19

• Kacee Johnson, strategic advisor, CPA.com: “It’s Johnson’s job to look into the future of accounting, and then develop research and education programs to prepare accountants for the technological innovations that are driving change in the profession, from blockchain and artificial intelligence to the pandemic-started revolution in remote work, and beyond.” • Ed Kless, senior director of partner development and strategy, Sage: “As co-host of his radio show with Ron Baker, ‘The Soul of the Enterprise,’ as host of his own podcast, and as a writer, speaker and all-around thought leader, Kless makes it his job to introduce the profession to new ideas and new ways of thinking about what they do, and why,” Accounting Today writes. • Taylor Macdonald, senior vice president of channels, Sage Intacct: “Macdonald brings decades of experience to his role helping large firms build and expand consulting practices built around outsourced accounting, reselling and software implementation — offerings that are some of the profession’s fastest growing,” Accounting Today writes. • Hitendra Patil, director of practice development, AccountantsWorld: “Patil works closely with accountants through his position at AccountantsWorld, but his real influence lies in his tireless championing of client accounting services — a cause for which his fervor has only deepened over the course of the pandemic, as he’s gone into overdrive to share its benefits as a fantastic way to give businesses the help they need to survive,” Accounting Today writes. • Scott Peterson, vice president, U.S. tax policy and government relations, Avalara: “One of Peterson’s primary roles is to support accountants and tax practitioners in their central role in the world of tax compliance, and he does that by sharing his nearly unparalleled knowledge of, and insight into, the field on a regular basis,” Accounting Today writes. • Ben Richmond, U.S. country manager, Xero: “On Richmond’s watch, Xero has seen record growth in the Americas, as he works to inspire more and more accountants and their clients to take their accounting to the cloud,” Accounting Today writes. • Charlotte Rushton, president, tax and accounting professionals, Thomson Reuters: “In addition to providing the tools used by a significant portion of accountants, Rushton is a major proponent of two important shifts in the profession: the move to advisory services, and the elevation of women to positions of leadership,” Accounting Today writes. BLI THOUGHT LEADERS • Ron Baker, founder, VeraSage Institute: Baker also delivers thought leadership programs for the Business Learning Institute. “Few people doubt that the value-pricing philosophy that Baker has championed for years represents the future, but getting firms to adopt it is an ongoing struggle, and he’s pursuing it through the popular radio show he co-hosts with Ed Kless, through the many consultants he has inspired and directly taught through his VeraSage Institute, and through the example of his role as chief value officer at Top 20 firm Armanino,” Accounting Today writes.

“We are incredibly proud to see this many MACPA connections standing out in a profession that includes more than half a million CPAs in the United States. Our heartfelt congratulations go out to each of them.” — Tom Hood, CPA,CITP, CGMA, President & CEO of MACPA/BLI • Jim Boomer, CEO, Boomer Consulting: “Boomer has built beyond the technology-based foundations of his consulting business to turn it into a one-stop shop for accounting firms that want to be future-ready, as well as a veritable font of thought leadership on the most pressing issues facing the 21st century practice,” Accounting Today writes. • L. Gary Boomer, founder, visionary and strategist, Boomer Consulting: “One of the pre-eminent promoters of the value of technology to the profession, Boomer is a major advocate for restructuring the modern practice with technology in a central role, bringing together firm leaders, IT professionals, and solution providers to move everyone forward,” Accounting Today writes. • Donny Shimamoto, managing director, Intraprise TechKnowlogies: Shimamoto also delivers thought leadership programs for the Business Learning Institute. “Long known across the U.S. for his understanding of how accountants can thrive through technology, Shimamoto is extending his influence internationally, advising the board of the International Federation of Accountants on the impact on the profession around the world of emerging technologies like A.I., blockchain, data analytics, and more,” Accounting Today writes. • Sandra Wiley, president, Boomer Consulting: “The coronavirus has made it clear that staff are the lifeblood of an accounting firm — and that they require more thought and management focus than ever. Wiley is one of the preeminent experts in teaching firm leaders (and the firm leaders of tomorrow) how to build the kinds of cultures that can thrive during the pandemic — and after,” Accounting Today writes. “We are incredibly proud to see this many MACPA connections standing out in a profession that includes more than half a million CPAs in the United States,” said Hood. “Our heartfelt congratulations go out to each of them.” Read Accounting Today’s 2020 list in its entirety at Accounting Today.com/report/the-top-100-most-influential-people-inaccounting2020. STATEMENT

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NEWS AND VIEWS Former MACPA exec Anoop Natwar Mehta to chair AICPA in 2022-23 BY BILL SHERIDAN, CAE Maryland has returned to the top of the accounting and finance profession — and it’s helping the profession become more diverse and inclusive at the same time. ANOOP N. MEHTA , a former chair of the Maryland Association of CPAs’ Board of Directors and president of Science Systems and Applications in Lanham, Md., will chair the American Institute of CPAs’ Board of Directors in 2022-23. The AICPA announced Mehta’s pending election in a video announcement on Dec. 21. He will be formally elected during a vote of the AICPA’s Governing Council in May. Mehta will become just the second Maryland CPA to chair the AICPA’s Board of Directors. He follows Kimberly Ellison-Taylor, a Baltimore native and former MACPA chair who served as AICPA chair from 2016-17 and chair of the global Association of Certified Professional Accountants from 2017-18. Mehta, who served as the MACPA’s chair from 2012-13, said this latest role wouldn’t have been possible without the guidance and mentorship from MACPA executives and volunteers who paved the way for him. “I don’t think I would have even been considered for this role had it not been for the MACPA and everything the association’s leaders have done for me for the past 20 years,” Mehta said. “For years, I have been surrounded by people who have gone out of their way to support me and my career. Now, I get to serve in a position that allows me to do the same for others.” Fittingly, Mehta — an Indian-American who immigrated to the United States in 1972 with his parents — follows a path toward a more diverse, equal, and inclusive profession that Ellison-Taylor has helped pave ahead of him. Ellison-Taylor was the first Black AICPA chair, the youngest AICPA chair, and just the fifth woman to serve in that role, and has been an active proponent of a more diverse profession for years. “I am proud of the efforts made by our profession in advancing a more diverse profession, and I also want to challenge everyone to get involved and volunteer their time to support diversity, equity, and inclusion. The AICPA and the MACPA can’t do this alone,” said Mehta. “I am indebted to (MACPA CEO) Tom Hood, (MACPA Chief Operating Officer) Jackie Brown, and the entire MACPA leadership team for providing me with the opportunity to serve the profession and Maryland, and I am thankful to Kimberly Ellison-Taylor for her friendship, and for paving the way for me — and hopefully others — to serve in more diverse leadership roles in our profession going forward.”

Mehta will serve as AICPA vice chair under Bill Pirolli, a partner with DiSanto, Priest & Co. in Warwick, R.I., whose term as AICPA chair runs from 2021-22. Mehta will take the AICPA helm in May 2022. “It’s a privilege to serve the profession I love,” Mehta said. “To my parents — my father, who served our profession for more than six decades, and my mom, who instilled the value of education — I am grateful to them and for taking that risk to bring our family to the United States and make a home here.”

“I am proud of the efforts made by our profession in advancing a more diverse profession, and I also want to challenge everyone to get involved and volunteer their time to support diversity, equity, and inclusion.” — Anoop Mehta, former chair of MACPA, president of Science Systems and Applications As president of Science Systems and Applications, Mehta has more than 40 years of government contracting experience, and has actively supported programs for both NASA and the National Oceanic and Atmospheric Administration. He is a former board member and past president of the Maryland Space Business Roundtable. In addition to his service on the MACPA’s Board of Directors, Mehta is an active volunteer with the association and a member of the AICPA’s Governing Council. Mehta credits his family for the encouragement and support in order for him to pursue his passion for the profession. Bill Sheridan, CAE, is editor of The Statement and chief communications officer with the Maryland Association of CPAs.

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NEWS AND VIEWS Interviewing the future of the profession Six MACPA member firms — Clifton Larson Allen; E. Cohen and Company; Gorfine, Schiller and Gardyn; Gross Mendelsohn; Katz Abosch; and MKS&H — participated in McDaniel College’s Interviewing Day on Oct. 1. Although the 2020 Interviewing Day was not the traditional in-person event at McDaniel, the accounting firms held a total of 84 virtual interviews with 31 McDaniel accounting majors. Pictured right: E. Cohen & Company Tax Director Michael Kissell (left) and Staff Accountant Brad Thaxton (top right) interview Chris McAboy, a senior accounting major at McDaniel College.

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DIVERSITY & INCLUSION Before ‘allyship’: First things first BY KIMBERLY ELLISON-TAYLOR, CPA, CGMA, CISA

I am convinced that before you can be a true ally, you must be a good person who actively seeks to understand the challenges that others face. This mindset is not based on any specific diverse characteristic, but rather on the fact that you have chosen a side — the human side.

Who knew we would end up thinking of the pre-COVID environment as the “good-old days?” Remember your very first day of work? Excitement and anxiety intersected with hours of preparation — and barely sleeping the night before. There were lots of dos and don’ts, along with the one tongue-in-cheek piece of advice: Do not eat anyone else’s lunch in the office refrigerator. And while we may think this is just common sense — many of us can share hearty laughs over the “Chronicles of the Office Refrigerator” — experiences like these serve as a reminder of what is at the core of teamwork. It’s “allyship.” “Allyship,” you ask?

A Google search for “allyship” results in more than 1.2 million entries, but after an initial review, I didn’t find a definition that appealed to me. The Wikipedia definition is tied to social justice and inclusion. While we definitely need it in that way, I want to return to the foundation of allyship — being a great person who, according to “KETpedia” (that’s the Kimberly Ellison-Taylor version of Wikipedia), is a person who is compassionate and actively seeks ways to advance, encourage, and empower others. “Others,” period. It’s a concept that’s not based on where “others” went to school, or their socioeconomic status, gender, race, age, orientation, ethnicity, religion, physical ability, or whether English is their first language. It’s a definition that has elements of the Golden Rule — to “do unto others as you would have others do unto you” — and, I would add, unto your loved ones. I am convinced CONTINUED ON PAGE 28

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that before you can be a true ally, you must be a good person who actively seeks to understand the challenges that others face. This mindset is not based on any specific diverse characteristic, but rather on the fact that you have chosen a side — the human side. In these unpredictable times, allyship is needed more than ever. It’s easy to drown in pessimism, but I urge us to focus on the good deeds we can do each day, and to recommit ourselves to being good people and good team members. We can’t change the world, but we can change our world. As allies, what if we demonstrated compassion by checking on and looking out for one another … just because? We can start by thinking about the “day in the life” of someone else’s life. For example: What if you woke up tomorrow and had swapped places with anyone else. Would that be okay? Better yet, if you are a leader, would you want to report to you? Ready for another entry from “KETpedia?” I believe great leaders have footnotes that connect them to the amazing leaders they helped cultivate, enhance, and promote across the full spectrum of inclusion. Being a good person doesn’t immediately factor into everyone’s definition of leadership, but my own career experiences tell me it is an essential ingredient. As we hear more about the importance of allyship, we also may wonder how we can start or re-energize ourselves as allies. Here are some examples that worked in a pre-COVID world when we were together in the same physical locations … and that also work in today’s virtual world. ALLYSHIP IN ACTION 1. Your boss stops by a few times looking for Ruth. When Ruth comes back to her desk, you say, “Ruth, Amy stopped by a few times. She is looking for an update for her 3 p.m. meeting.” 2. You are at the printer to pick up your printouts but realize John has left personal information on the printer. You put the information in an envelope and place it on

Being an ally and being a good person are related. Each involves taking care of other people. Let’s consider the many ways we can be better team members tomorrow than we were today. his desk — while trying to not look at any of the details. And you don’t mention it to anyone else. 3. You are in a meeting and realize Amy is missing. She mistakenly didn’t receive an invitation, and the topic is an area related to her assignment. You send a note to the organizer and / or mention that Amy is missing from the invitation list and should be included. When the mistake is noted, you then send her a text and ask if she can join the meeting. If she is unable to attend, you offer to bring her up to speed on any actions. If this a Zoom call, you mute the call and try to reach Amy on the phone in case she didn’t see your text in time.

just as important. All too often, however, when allyship is needed, silence or nonaction is more likely to happen when it involves a diverse group. Being an ally and being a good person are related. Each involves taking care of other people. Let’s consider the many ways we can be better team members tomorrow than we were today. Little actions add up to big ones. Checking on a sick team member, remembering to ask about sad or even great news, or advocating for someone whether or not they are in the room are great ways to be an ally. These actions also promote teamwork — trust, inclusion, and a sense of belonging for everyone.

4. Steve can’t make an update meeting — it’s his day off. Fortunately, he and you are working together on the project. When you give the update, you note that both you and Steve are working well together and then give the status.

Perhaps one day we won’t need to talk about diversity. Perhaps, instead, we’ll be able to celebrate our differences and the differentiated value each of us contributes to our organization’s shared mission, purpose, and values.

5. A team meeting usually involves many interjections and contributions. You notice that Stephanie isn’t able to get a word in, so you say, “Stephanie, it looks like you have a few thoughts to share on this topic. What’s on your mind?”

If not you, who?

6. About 15 minutes into that same team meeting, Lisa makes an observation that is not acknowledged. Thirty minutes in, Richard and Katie both offer the same thoughts as Lisa’s earlier observation. You say, “Great point, Richard and Katie. It sounds like Lisa agrees. Lisa, is this what you were thinking?”

If not now, when? Kimberly Ellison-Taylor, CPA, CGMA, CISA, is a past Chairman of the Maryland Association of CPAs, a past Chairman of the American Institute of CPAs, and Executive Director – Finance Thought Leadership with Oracle.

These are just a few examples of allyship in action. They may not be as intuitive as not eating someone else’s lunch, helping a senior cross the street, or calling 911 if you notice that a building is on fire, but they’re

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BUSINESS & INDUSTRY How CFOs can enable innovation now Businesses need innovation now more than ever, so energize your organization by taking action in three areas BY AMY J. RADIN Editor’s note: This article first appeared in Financial Management magazine. For more articles, sign up for the daily email update CGMA Advantage at http://bit.ly/2svn2AY. DEFINING ‘INNOVATION’ — A WORD THAT SPARKS ADMIRATION AND CONTROVERSY The word “innovation” itself can be polarizing. It conjures up coolness and threat, inevitability and unpredictability, attraction and avoidance. Few will debate that innovation is essential — yet it fails more often than it succeeds and can be easily derailed by the forces of the status quo. Innovations are viable new offerings that solve people’s real problems — i.e., they:

Organizations in every corner of the economy are focusing with renewed intensity on innovating to anticipate and meet new customer expectations accelerated by and arising from the pandemic. We are not going back to the way things were pre-2020. The pressure is on to transform business models from top to bottom and acknowledge that innovation, far from being “cool stuff” or an off-to-the-side, not-always-measurable set of activities, is core to any business’s strategy in this rapidly changing, uncertain, and unpredictable world. CFOs, by virtue of their role in an organization, their platform, and their relationship to the board, the CEO, and their C-suite colleagues, are uniquely positioned to enable an organization’s innovation results. Their ability to exercise innovation leadership at this moment may be vital to their business’s future. This article presents recommendations on what they can do to enable the innovation agenda and how to ensure their actions translate into results.

• Can be executed and delivered — technically, legally, ethically, financially, operationally, etc. • May be new to a segment, geography, industry sector, or even to the world. • May be incremental — enhancing an existing business, product, service, experience, etc. — or disruptive and completely game-changing. • Address actual needs of the people a business wants to serve, whether the business has a business-to-business or businessto-consumer focus. • Exist in many forms as illustrated by the Ten Types of Innovation model created by The Doblin Group. In its research, Doblin has found that innovations tend to be least effective when focused solely on product, and most effective when combining five or more of the 10 types. For example, consider how Ikea has combined innovating the brand, customer experience, product, business model, and processes, or how Zappos innovates the brand, customer experience, channel, product assortment, and business model — in both cases creating unique positions in the market and in the minds of their customers. WHERE IS THE CFO’S LEVERAGE TO ENABLE INNOVATION? The CFO can accelerate innovation progress, energize the organization, and signal culture change by taking action in three areas: 1. Ensure resources are adequately allocated to innovation: Innovations don’t generally happen within the confines of the annual planning cycle. The reality is that innovation can feel messy relative to the structures most businesses follow around budgeting, forecasting, and planning. It’s driven by the marketplace, by customers’ expectations, and, as the world has experienced this year, by events beyond our control. CONTINUED ON PAGE 32

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Consider good practices for resourcing innovation that create flexibility and support financial management requirements. For example: • Challenge teams coming forward with innovation proposals to see themselves as founders, who self-fund the very first steps before seeking outside capital. Good founders gather qualitative, directionally meaningful customer feedback, and develop rough prototypes for proof-of-concept purposes on shoestring budgets. • Borrow from the startup playbook by funding early stage concept development in incremental tranches, investing relatively small amounts of capital as milestones are met. Plan a research and development line into the budget so that these investments are accounted for, and anticipate larger investments when it is time to scale. • Value and consider each innovation initiative as an item in the investment portfolio the business is creating to assure the company’s future. Each investment will have a different degree of risk and reward, and likelihood of success, and will pay off at a different point in time. We know that a balanced portfolio mitigates risk and also bakes in the reality that not all portfolio items will succeed or succeed to the same degree or at the same time. Expect that many projects will yield learning and fail to reach commercial success but create value insofar as they can inform future efforts or may be “version 1.0” renditions that require further iteration or time, so should not be discarded. Mapping the portfolio initiatives on a matrix will help confirm whether the mix is right, too aggressive, or too conservative relative to the company’s strategy and goals. 2. Develop policies and processes that facilitate innovation: Some years back my team wanted to run a test in partnership with a startup company whose advanced technology could enable exceptional delivery of critical elements of the customer experience, overcoming a significant barrier that business-as-usual solutions had not addressed. The project manager set off through the standard approval process, starting with contacting the procurement team. I received a call one day from the procurement specialist who told me, “We cannot work with this vendor because, according to their (Dun & Bradstreet) report, they lose money.” No kidding. This was an early-stage startup (which, incidentally, ended up with a $300 million-plus exit a few years later that we never could have foreseen). As is typical of early stage businesses, this startup was losing money at that point — capital had been invested in building a world-class platform, and the sales pipeline was not close to maturing. By the standards of a scale business operating in a highly regulated sector, integrating a capability from a P&L-negative provider would not be acceptable. But in the case of a low-volume test of a new capability whose functionality is not core to the safety and soundness of the enterprise, the risks are different and so are the mitigation strategies. In this case, we articulated upfront a

Innovation requires a different approach with rigor appropriate to the task, risk, and capital involved. clear exit plan, including what we would communicate to customers involved in the pilot; acknowledged that the pilot investment would be written off; and had a clear plan to account for a write-off in our financials. Applying policies and processes that work well for a scale operation can be overkill for a nascent concept. Innovation requires a different approach with rigor appropriate to the task, risk, and capital involved. What can the CFO do to cultivate innovation-appropriate policies and processes? • Help C-suite colleagues and the finance team focus on asking the question, “What is the problem we are trying to solve?” in assessing next steps for a new concept. • Ensure relevant processes are in place to assess and approve innovation vendors and other strategic decisions that both enable experimentation and address the need to protect the enterprise. 3. Adopt relevant metrics: Early in my corporate career, when I was on a team seeking seed funding for a new concept, an executive offered valuable advice that has stuck with me. In a presentation to this particular executive, the team shared copious financial analyses, including five years’ worth of P&Ls carried out to the penny. He waved aside our spreadsheets and, laughing, told us, “Don’t seek a level of precision that cannot be possible when you are looking at something so new.” Instead, the CFO can lead the adoption of common-sense approaches to ensure discipline — the right kind of discipline — for evaluating and monitoring emerging business models. When measuring innovation effectiveness, what is most important is to ask the right questions, be confident in relying on judgment where facts simply do not exist, seek metaphors from other sectors or markets, and accept good enough data that can be refined along the way. Smart questions answered in fast test-and-learn cycles can help a team to derive the relevant metrics and keep innovation projects moving closer to success, or to the set-aside pile. There is comfort in hard data. It is reassuring to see numbers in organized columns and rows with optimistic trends demonstrating success. But innovation is messy, and it’s vital to explore, listen, and dig into qualitative insights that could be important signals that are just too raw to quantify.

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BUSINESS & INDUSTRY WHAT CAN THE CFO DO TO SUCCEED AS AN INNOVATION ENABLER? The CFO role is evolving, and for people pursuing careers that include even a stint in the finance function, this is an exciting time to make an expanded contribution to their company, leveraging the unique positioning and attributes of their roles. Address these four priorities to support this evolution: • Step up to the broader role, acknowledging the opportunities beyond traditional reporting, budgeting, and forecasting responsibilities and how critical this scope is to the business’s future. • Update the talent strategy for the finance function, in particular by recruiting diverse team members and encouraging the strengthening of skills in customer insight, data analytics, and trend analysis that will enable them to be productive and highly valued thought partners to colleagues working on innovation initiatives. • Assess and augment the capabilities the function needs to perform effectively now, particularly technology capabilities that allow ready access to usable data and support the team’s ability to get from data to insight to action. • Find the right balance between shareholder requirements and those of the other stakeholders to the business — customers, vendors, partners, employees, regulators, and the broader community.

CFOs must embrace the reality that to be an innovation enabler, many of the decisions they will be asked to make will be “and” decisions, not “either / or” choices. They will be faced with polarities. To identify, shape, test, launch, and scale innovations requires financial management approaches that may feel at odds with traditional ways of operating. But the adoption of fit-for-innovation methods is essential to nurturing new ideas and allowing them to grow into commercial successes. Amy J. Radin is the author of The Change Maker’s Playbook: How to Seek, Seed and Scale Innovation in Any Company. Her corporate career included roles as a Fortune 100 digital, marketing, and innovation executive. Now as a keynote speaker, and as an adviser and board member, she brings her expertise to help teams innovate. She serves on the Association of International Certified Professional Accountants’ Board of Directors. To comment on this article or to suggest an idea for another article, contact Kim Nilsen, FM magazine’s publisher, at Kim.Nilsen@aicpa-cima.com. © 2020 Association of International Certified Professional Accountants. All rights reserved.

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TAX CORNER Transferring property to family members during your lifetime Alerts for valuing assets under the changing gift / estate tax rules BY THOMAS J. STEMMY, CPA, CVA, EA KEEP A CLOSE EYE ON THE CHANGING LIFETIME EXEMPTION FOR ESTATES When necessary, talk to a valuation professional about a defensible asset valuation. During these uncertain times, there is an increasing likelihood that many more estates will be subject to the unified gift and estate tax with tax rates ranging between 18 percent and 40 percent. Why? The generous lifetime exemption, which has been climbing above $11 million ($22 million for marrieds), is expected to be short-lived because of a statutory “sunset” provision set by the Tax Cuts and Jobs Act of 2017. At the end of 2025, the existing lifetime exemption will be reduced to $5 million adjusted for inflation. With the recent wild swings in the tax code over the federal estate tax, it has been increasingly difficult for estate planners to get a straightforward answer to a very basic question: Could there still be tax-saving benefits in transferring property ownership to younger family members? Interestingly, many family planners are bound and determined to transfer ownership of certain assets to other individuals (usually to their children) regardless of the tax consequences. However, the savvy planner will continue to do everything within the law to minimize any tax burden that may result for the family. It’s true, in the right circumstances there definitely could be a tax-savings benefit in transferring asset ownership, especially when the assets have potential for appreciation – such as business interests, real estate, and other types of investment property … and, yes, even the cherished family home.

A WAKE-UP CALL FOR ESTATE PLANNERS Now, in 2021, with more uncertainty looming on the political front and in the tax code, it is important that estate planners look harder than ever at the real fair market value of the assets that they intend to transfer. Before they proceed with a gifting plan, they should know one thing with reasonable certainty based on the best information available: How much tax is their estate really facing – if any at all? Look at it another way. In many cases, taxpayers could be doing themselves a huge disservice by transferring an appreciating asset to an heir who would later get hit with an unexpected capital gains tax because they were deprived of the coveted basis “step-up.” And it could get worse. The taxpayer could later learn that he had gone through the trouble of transferring ownership of property to get it out of an estate that wasn’t even taxable in the first place.

But there’s more. With history as a guide and an unprecedented national deficit, many experts believe the lifetime exemption for estates could be reduced even further to historically low levels. With these unknowns, it is easy to see why family planners are facing unique challenges when trying to plan their estates. Should they make a lifetime gift transfer of appreciating assets to minimize a high estate tax liability upon death? Or should they wait and bequeath those assets to family members and save them a harsh capital gains tax with the magic of “step-up?” Informed estate planners know gift transfers generally must be reported on a gift tax return (Form 709). That return must report the fair market value of the gifted asset, and the reported value will eventually wind up as part of their gross taxable estate. However, now (because of “sunset” and other unknowns about the future of the lifetime exemption), many have wondered if those well-intentioned gifts would cause CONTINUED ON PAGE 36

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their estate to be blindsided with an unexpected estate tax problem down the road. GOOD NEWS: NO ‘CLAWBACK’ ON LARGE LIFETIME TRANSFERS Fortunately, Congress became aware of this unfairness with the changing playing field and when the TCJA was amended. The IRS was directed to prescribe regulations that would prevent a “clawback” phenomenon after 2025. If they act timely, donors can make substantial gift transfers to their heirs without fear of losing the generous lifetime exemption that is currently available. USE-IT-OR-LOSE-IT PLANNING TIPS Planning Tip 1: To lock in the high lifetime exemption currently in existence, taxpayers should look ahead at their gift planning schedule and make sure that gift transfers are made prior to Jan. 1, 2026. Planning Tip 2: In the event of death of one married taxpayer before Jan. 1, 2026, both spouses can still take advantage of two full lifetime exemptions (now as high as $23.16 million) thanks to the “portability” rules in the tax code. To lock in this higher exemption, the executor of the deceased spouse simply needs to file an election of “portability” on a timely filed estate tax return (Form 706). The election will allow the surviving spouse to claim any unused exemption of the deceased spouse. SETTING GOALS FOR AN ESTATE PLAN AMID UNCERTAINTY Not knowing what Congress will eventually do with the lifetime exemption and estate taxes in general has resulted in unprecedented challenges for individuals trying to create a truly tax-efficient estate plan. However, much can be achieved if you (a) first obtain a realistic estimate of the value of the assets that you own, and (b) make the best estimate possible on how much estate tax will be owed – or if your estate will even be taxable. In this regard, tax professionals, attorneys, and financial advisers can provide valued opinions and logistical advice. However, without the power to see the future of the estate tax laws, a team effort is essen-

tial to make the best judgment call possible. And a key member of that team is the client himself, who can make valued contributions in two ways.

can, in making lifetime gifts of appreciating assets to his children. In short, he will allow his heirs to take advantage of the benefits of basis step-up upon his death.

First, the client should take the lead in compiling a reasonably accurate projection of the fair-market value of the assets to be included in his estate. In many cases (especially with investment properties and business interests), a qualified valuation professional should be consulted. The taxpayer / client should also be reminded that any hasty, back-of-the-envelope projection of asset values can backfire in his tax-saving strategy. Further, a faulty asset valuation that will be used on a gift or estate tax return that results in a tax underpayment could bring on harsh IRS penalties — up to 20 percent of the tax underpayment.

A word of caution: Basis step-up has long been referred to as one of the biggest loopholes in the entire tax code. However, as some political observers have noted, the tax-saver known as step-up could also be short-lived in the coming years as Congress grapples with a struggling budget.

Second, the client / taxpayer should share his own personal views about the state of the economy and the political uncertainties that will shape the broader picture of the future of the federal estate tax. Put another way, the taxpayer and his professional advisers should agree on how to make the best-informed judgment call possible on key questions, such as: Will the lifetime exemption remain at the lowered $5 million range (adjusted for inflation) after 2025? Or worse, is it likely that the exemption will be reduced even further, resulting in a higher estate tax bill down the road? SPECIFIC TAX-PLANNING STRATEGIES ARE BACK All estate planners need to know if they will be facing federal gift / transfer taxes. If the planning team agrees it is likely that there will never be enough assets to trigger an estate tax, the plan recommendations will be straightforward. Case 1: Herb, a 70-year-old widower, and his advisers agree that the value of his assets will probably remain well below the $5 million exemption (indexed for inflation) that was set by TCJA for 2026. The chances are good that Herb will be recommended to hold off, as best he

On the other hand, many tax experts tend to agree that if gift transfers are made now, it is not likely that they will be blindsided by future tax legislation that would abolish basis step-up across the board under a clawback mentality. HIGHER NET WORTH TAXPAYERS: HERE’S WHERE IT GETS TRICKY Again, any gift transfer plans should be made only after the planning team comes up with a realistic projection of asset values – especially with business interests, real estate and other investment holdings. As the sunset year gets ever closer, many higher net-worth family planners are looking to their attorneys and tax advisers for thoughts on how to deal with an impending estate tax burden, which could now be inevitable for their family. The TCJA has plans for the lifetime exemption to be reduced to $5 million after 2025. However, with inflation indexing and a strong market forecast, respected experts estimate that (under TCJA) the lifetime exemption will be between $6 million and $7 million in 2026. Case 2: Susan, age 70, is a single mother with two children who have been named as her sole heirs. Susan’s assets include several real estate and investment holdings that helped bring her net worth above $7 million, and an expected estate tax liability of nearly $1 million. It is likely that a gift-planning strategy will be put on the table for discussion. Susan needs to first be reminded that there is no one-size-fits-all gifting strategy in a tax-efficient estate plan. It is not within the scope of this article to try and discuss CONTINUED ON PAGE 38

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all of the many creative strategies permitted in the tax code to minimize estate tax liability. Instead, some brief commentary is shown below on several popular tax-saving options that are on the table for those who wish to transfer ownership of appreciating assets during their lifetime: ANNUAL TAX-FREE GIFTS This is perhaps the best understood and most used approach for getting assets out of one’s estate. In 2020, a donor is allowed to transfer by way of gift up to $15,000 to as many individuals as desired without having to file a gift-tax return or incur a gift tax liability. If larger gifts are made, the excess will be applied against the donor’s lifetime gift / estate tax exemption. Gifts for children’s tuition and medical expenses can be unlimited as long as the payments are made directly to the institution. DONATING PROPERTY TO CHARITY Stocks, bonds, and real estate continue to be among the top leveraged choices for gifts to an estate planner’s favorite charity. In addition to removing value from one’s estate, the taxpayer eliminates the capital gains tax that would have been incurred upon liquidation of the asset. Further, a charitable deduction is allowed for the fair market value of the appreciated value of the asset, which, in many cases, will need to be supported by an independent appraisal. THE CHARITABLE REMAINDER TRUST This is a popular tactic that has long been relied on to reduce one’s taxable estate and, at the same time, obtain economic benefits. In addition to contributing to your favorite charity, you could create a lifetime of income by converting highly appreciated stock or investment assets to an irrevocable trust – and get a charitable deduction besides. And since you do not pay any capital gains tax on the transaction, you are better off than if you had sold the assets yourself and invested the proceeds.

FLPs AND LLCs: TOP CHOICES FOR TRANSFERRING BUSINESS INTERESTS The “family limited partnership” and the “limited liability company” are still among the most effective options for transferring interests in business and investment property to younger heirs. The objective generally is to transfer — by way of gift — non-controlling interests to younger family members. Deep discounts of value are often allowed when it can be shown that there is a bona fide business arrangement with a qualified appraisal on hand. For some, the FLP is the preferred choice because the parent / donor is designated as the “general partner” who maintains managerial control of the investment property. However, it is reminded that if liability is a concern, the better option would be the LLC, since it protects all members from liability. The FLP, on the other hand, only protects the limited partners (the children). A discussion with the estate attorney is essential in view of a possible assertion by the IRS that the intended gift of an FLP interest is actually an indirect gift or a sham transaction to avoid taxes. IRREVOCABLE TRUSTS FOR TRANSFERRING ASSETS TO THE NEXT GENERATION Although there are several trust options, the Grantor Retained Annuity Trust (GRAT) has recently received much attention as a top tax-saver when transferring assets to the next generation. In a GRAT trust plan, the family planner transfers to the trust investment assets with potential for appreciation. In return, he retains the right to receive income payments for a fixed number of years — an annuity period. When that period ends, the assets are passed to the beneficiary children at their full value outside of the estate. However, the annuity payments that the donor receives in return are based on an interest rate set by IRS. And with interest rates at historic lows (under 1 percent), it is easy to see why the GRAT has become a leading candidate for leveraged wealthtransfer planning.

FINALLY, LET’S NOT FORGET THE FAMILY HOME The family residence is often the most important highly appreciating asset on the family planner’s wish list for gift transfers. However, if he plans to stay put in his home, there are certain legal hurdles that should first be discussed with his attorney. On the other hand, for tax planning, the family planner should keep the following observations about a gift transfer in mind: 1. If there are no estate tax problems on the horizon, the best strategy would be to forget a transfer and keep the title in the homeowner’s name. He won’t need to file a gift tax return and the kids will enjoy the tax saving benefit of basis step-up. 2. On the other hand, if an estate tax problem is in the cards, an outright gift of the property might be considered — but only if it appears likely that there will be enough future appreciation in value to make the tax-savings worthwhile. Of course, the reported gift transfer will eat into the lifetime exemption, not to mention that the kids will face a bigger capital gains tax without the benefit of basis step-up. In addition, if the donor continues to occupy the home, he will be doing so as a tenant and a fair rental arrangement with the owner/children will be necessary. Either way, when deciding whether or not to make an outright transfer of ownership of his home, the family planner should keep in mind the valued $250,000 / $500,000 exemption for capital gains which will only be available to the homeowner who lived in the home for two out of the last five years. THE “RETAINED LIFE ESTATE” ALTERNATIVE Transferring ownership to a “retained life estate” on the deed of your home has long been recognized as a convenient way to avoid probate for your heirs. However, when retaining the right to use and enjoy the property for an extended period, there are tax implications that need to be understood, especially for higher net worth taxpayers like Susan above. First, the gift tax aspects: A gift tax return is generally required when it is shown that STATEMENT

TAX CORNER the owner gave up (without consideration) “dominion and control” of ownership of his home along with the “remainder interest” that will go to the children. However, if the transferor retains sufficient powers over the remainder interest (such as the right to sell the property without prior approval), the transfer would not be complete and, thus, no gift tax return would be required.

if so desired. In addition, exposure to legal liability just might be avoided and, thus, the revocable living trust option should definitely be discussed with the attorney for the estate.

The good news, however, is that basis step-up will be allowed for the children / beneficiaries.

Finally, the qualified personal residence trust alternative, or QPRT: The QPRT trust has long been recognized as an excellent way to eliminate the future appreciation of the family home (or a second home) from the taxable estate while, at the same time, the grantor retains the right to retain possession and use of the property. However, the estate planner should be informed that a greater tax saving benefit could be achieved by waiting for interest rates to rise. By formula, a higher interest rate means a lower present value and a lower gift value along with a lower gift and estate tax.

Note: If avoiding probate with your home is your main objective, you may find a revocable living trust to be a better alternative. For one thing, it is generally more flexible and will allow you to change a beneficiary

For income tax purposes, the QPRT is a grantor trust that holds title to the property. However, there are non-tax as well as tax reasons that should first be discussed with a qualified professional. For one thing,

Second, the estate tax: Unfortunately, there is bad news for tax savings. Property that was transferred to retained life estate ownership is generally included in the gross taxable estate whenever the decedent has retained the rights of possession or enjoyment of the property.

the grantor has the right to occupy the residence for a fixed term, after which ownership must be relinquished. At that time the beneficiaries (the children) will own the property and a rental arrangement will be necessary. Lastly, regarding estate taxes and the QPRT: For the QPRT strategy to work, the grantor must outlive the trust term period. If he dies before the end of the term, the property is brought back into the estate as if the QPRT never existed. However, the estate will be entitled to full credit for any tax consequences from the original gift to the QPRT. In short, the estate planner will be no worse off than if he had never created the QPRT. Thomas J. Stemmy, CPA, CVA, EA, MMS, is a partner with Stemmy, Tidler & Morris PA in Greenbelt, Md. He can be reached at tstemmycpa@yahoo.com.

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HIGH-TECH SOLUTIONS Blockchain and the future of auditing BY MICHAEL RYAN, CPA Editor’s note: The following article was originally published by the Pennsylvania Institute of CPAs. It is reprinted here with permission. If you are still wondering what blockchain is and what it means for accountants, you are not alone. Often considered synonymous with cryptocurrency, blockchain may actually open up accounting to the world of triple-entry accounting. This is something the profession has been working toward since the dawn of the Internet. Now it is being made possible through blockchains.

Two blockchains that may come to mind are Bitcoin and Ethereum. Bitcoin has emerged as the store of value for most digital assets, while Ethereum has emerged as the blockchain for innovation. But I suspect the first Fortune 500 company to have a financial statement audit successfully performed on a blockchain will use neither Bitcoin nor Ethereum. It has proven too difficult to scale either of these to be reliably useful for publicly traded companies.

Simply put, “blocks” on the blockchain are digital tokens (or digital receipts) of information. Blockchains mint new blocks of information in a decentralized manner, meaning transactions on a blockchain are verified in a more public manner, and a post to the “ledger” or blockchain must be verified by a list of third-parties before the transaction can go through.

Of course, Bitcoin’s blockchain was only created 10 years ago and Ethereum’s only five years ago. Thus, it is too early to tell if my prediction will prove right or wrong. Still, I think a more likely scenario is that there will be the equivalent of a MySpace-to-Facebook displacement that will accelerate the widespread adoption of blockchain for financial reporting.

In double-entry accounting, Company A has its books and records, its bank has its own books and records for Company A, and an accounting firm would spend hours making sure those two sets of books match. With triple-entry accounting, before even being posted on Company A’s books or its bank’s books, a third-party group of validators (“miners”) on the blockchain must agree that the transaction is valid. Then the transaction gets posted to a ledger shared by Company A and its bank.

Blockchain experts, Bitcoin enthusiasts, and most everyone in these circles are government-resistant. Generally speaking, the people in the blockchain world are aggressively free-market oriented and do not believe in reporting to the government. I have developed a successful practice that gently reminds entrepreneurs that certain governmental oversights are unavoidable currently. Their liquidity is heavily dependent on audits, as successful innovation requires trust. CPAs can help them navigate the financial oversights of which they are suspicious.

The auditors can then come in and review the books and records that the shared blockchain has compiled. Better yet, the audit firm shifts its business model entirely to focus on System and Organization Controls (SOC) audits of the third-party miners, spending little time on ensuring that transactions match and more time focusing on “why” these transactions went through. This is audit utopia, and we remain far away from that. Everyone’s job is safe. However, in positioning ourselves as a profession that provides more advisory services, we must embrace this technology. To further understand how triple-entry accounting is possible with companies running on blockchains, brush up on what mining is. This is where the value is and how you can be confident that the general ledger being posted to the public is correct and verifiable. Not only does it make an auditor’s life easier, we also can start to have real-time financial reporting. XBRL-tagged financial statements could be updated every 15 minutes. This would save a lot of time and avoid a lot of fraud. It is difficult to commit a fraudulent public transaction when people can review your work every 15 minutes.

CPAs will have a decision to make about doing the right thing when it comes to financial reporting, tax reporting, and compliance for blockchain transactions. The right thing is to empower these new clients to become more cooperative with regulatory agencies; that is how blockchain and the cryptocurrency industry will have room to grow. But much relies on the honest assessment of your abilities at your CPA firm. Will you outsource blockchain calculations to a service provider? How will you navigate which providers have SOC audits and which are reliable when it comes to reporting the performance of digital assets? CPAs need to answer these questions. They are not crossing the minds of many in the digital assets industry, mostly because they are relying on CPAs to be the experts in this area. Michael Ryan, CPA, is president of Greystone Consulting Inc. in Ambler. He can be reached at mike@greystoneconsultinginc.com.

So, what does blockchain mean for audit firms? Really, only time will tell. You can, however, prepare for audit quality that will be improving as we scale these blockchains. WINTER 2021

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FROM OUR PARTNERS Hiring and managing talent for tax season B Y K I MB E R LY E LLISON -TAYLOR, CPA, C GMA, CIS A Unfortunately, the often-lamented long hours of tax season did not significantly decrease, despite the use of technology. As a result, tax season hours are yet another reason we must continue to advance our technology approach, adoption, and usage across all aspects of the practice. The very thought of 60 hours each week is enough to dissuade prospective hires and perhaps discourage existing team members from returning. If this isn’t difficult enough, the perspectives on tax season hours permeate across all segments of the profession and are reasons students give about not choosing public accounting. Without key changes in hours, we will find it increasingly difficult to hire high performing talent. If team members are able to work flexible hours from remote and virtual locations, there could be less pressure on some to complete the tax season workload.

There are many things about 2020 that we won’t miss. COVID-19 resulted in health, business, and economic challenges that continue to evolve. In response, individuals and businesses have reimagined their path forward, and determined new strategies for operating, including hiring and managing talent for tax season. We often hear that necessity is the mother of invention, and that couldn’t be truer, especially as we consider new ways of engaging team members. Stay-at-home orders meant we were living at work via the office / guest room, while many began homeschooling their children almost overnight. Fortunately, in the public’s interest, tax and accounting practitioners were considered essential during 2020’s extended tax season. The ability to continue working outside their offices required new processes and technologies to handle the increased workload. For example, cloud solutions enabled artificial intelligence-driven tax preparation, secure transmissions, and confidentiality of client information. For many firms, the transition from on-premise to the cloud represented a significant shift in mindset. The benefits of technology were underscored during COVID-19, even though we had the most unusual tax season many of us can remember. Deadlines were met and clients received above-and-beyond service. As we look to the upcoming tax season, it’s time to consider the full benefits of technology and new ways of hiring and managing talented team members. In quite a few cases, while firms used technology to process returns from multiple virtual locations, the “essential” designation was used to work with socially distanced team members in the office.

It’s also no surprise there are increasingly scarce team members where tax firms – big and small – are looking for similar skill sets. This means tax professionals can be choosy about where they work. According to Adzuna, there is a 600-percent increase in jobseeker inquiries that include the words “remote,” “telecommute,” or “work from home.” Offering virtual and remote options is an undeniable competitive differentiator. With technology, not only would remote team members be considered, but local team members would be able to work virtually. Team members in lower cost-of-living geographies, as well as areas that may have more talent for hire, would also benefit by leveraging technology in administrative processes like human resources. It’s a win across the board — if we can determine creative ways to improve the reputation and feedback about the profession. Consider hiring remote and virtual team members who can access your firm’s system based on flexibility and according to workload. This is not nearly as challenging as it may appear: • Job descriptions can be updated to reflect the duties and expectations of the roles, with virtual interviews and followup as needed. Concerns about confidentiality of data can be discussed and evaluated during the interview process through reference checks, and by implementing a non-disclosure agreement and cybersecurity leading practices. • Onboarding processes and training can be performed remotely and conducted live via web conferencing and / or using recorded sessions. • Team meetings, feedback, and performance evaluations can also be conducted virtually by leveraging any number of teleconferencing options. The upcoming tax season amid COVID-19 will surely require even more updates and new regulations to learn. Tax preparation solutions that reinforce consistent and accurate processing, and CONTINUED ON PAGE 44

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FROM OUR PARTNERS CONTINUED FROM PAGE 43

reduce errors, will promote team confidence. It will also help your team get to up to speed faster, thereby decreasing preparation timeframes and hours. Talent management is not easy during a typical tax season, but the complexities are accelerated and dramatically increased when there are new updates, long hours, team members with varying familial responsibilities, and increased tax workloads. Technology enables transformation, as well as new and improved ways of hiring and managing talent. Maximize all of this to its fullest extent.

Kimberly Ellison-Taylor, CPA, CGMA, CISA, is a transformational leader with a compelling background of strategy, finance, people leadership, digital engagement, business development, and technology. Her career achievements include leadership roles at Oracle, Motorola, KPMG, Prince George’s County Government, and NASA Goddard Space Flight Center. In her most recent role at Oracle, Kimberly serves as executive director - finance thought leadership to promote finance transformation and digital strategies in organizations of all sizes. She is a former chairman of the board for AICPA, the Association of International CPAs, and the Maryland Association of CPAs.

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FROM OUR PARTNERS It’s time to cure your clients’ pain … and yours, too B Y DI V B H A N S A LI HOW DID THIS HAPPEN? All of these pain points are the easily foreseeable result of using popular DIY accounting software – solutions that were created for small businesses, not for professional use. But here’s the real irony: Small businesses despise doing the work that comes with those DIY solutions. In fact, according to a SCORE survey, 40 percent of small business owners say bookkeeping and taxes are the single worst part of owning a business. And accountants certainly don’t like the current situation any more than their clients do. One complained to me, “Instead of helping clients make better decisions for their future, I spent all my time trying to catch up in fixing their errors from their business past. By the time the financial data of the past is cleaned up, it’s too late to change the course of their business disasters.” The question then arises: Why recommend these DIY accounting programs to your clients when both parties are so dissatisfied with the results? The response from most accountants is straightforward: “What choice do I have?” If I were to ask the small business owners I know whether they enjoy doing accounting work, I’m sure fewer than 10 percent would raise their hands. My guess is that if you were to poll your own clients, the results wouldn’t be much different. You know from experience that the vast majority of small businesses find accounting work to be a hassle. Today it is more important than ever for small business owners to focus their attention on sustaining and growing their businesses. For most owners, managing accounting functions is simply a distraction from what they need and love to do. Accounting is mostly seen as a burden, and few small businesses use accounting tools proactively to better manage their business finances. Additionally, it is often hard for small businesses to get competent accounting or bookkeeping staff or help. And many of you know well what the consequences are for you and your clients. For one, you spend a significant amount of your time fixing the bookkeeping errors that clients make. Numerous surveys of accounting practices have rated this as one of the major challenges accountants face. Perhaps most alarmingly, clients that use do-it-yourself accounting systems limit your ability to provide them with timely strategic insights based on their financial situation. In this challenging economy, your clients need the very best advice you can provide, but their choice of software can be a serious impediment to you being able to do so.

Fortunately, now you have options. You can choose software that facilitates your firm being able to offer highly profitable Client Accounting Services, including paying bills, recording transactions, performing trial balance work, creating financials, and managing your clients’ cash flow and business finances, easily and profitably. And that provides the solution to both your and your clients’ pain: Eliminate the need for your small business clients to perform bookkeeping and accounting in their offices, and have your firm handle most or all accounting functions for them. Perhaps you’re still skeptical of offering services like bill payment and bookkeeping, believing them to be low-margin and high-hassle. But some of the latest cloud accounting solutions let your staff do what your clients’ staff currently does – only faster, better, and from anywhere at any time. The cloud has opened the door to bring complete accounting services back to accountants. Don’t miss this unique opportunity to boost your bottom line while reducing your clients’ burden and helping them better manage their businesses. Div Bhansali is a vice president at AccountantsWorld, a leader in cloud-based accounting and payroll solutions. He also serves as adjunct faculty at the University of North Carolina at Chapel Hill.

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MEMBER NOTES CLASSIFIEDS MACPA President and CEO Tom Hood ranks second and former MACPA and AICPA Chair Kimberly Ellison-Taylor ranks third in Accounting Today’s annual list of the “100 Most Influential People in Accounting.” MACPA members Wayne Berson, Edward Karl, and Jody Padar also made the cut. Read more on Page 19. Three members of the Maryland Association of CPAs — Krista Hickman, Jessica McClain, and the MACPA’s Director of Development, Rebekah Brown — have been named among Maryland’s “2020 Leading Women” by The Daily Record. Read more on Page 17. William F. Fritts, CPA, CVA, member of SEK, CPAs & Advisors, has been voted Best Accountant in the Tri-State area by HeraldMail Media readers for the second year in a row.

FIRM NOTES BDO USA LLP plans to acquire Owings Mills-based Hertzbach & Co. P.A., continuing its expansion in Greater Baltimore. BDO will maintain Hertzbach’s office in Owings Mills. Hertzbach’s Arlington, Va., office has been integrated into BDO’s McLean, Va., office. Hertzbach’s Rockville office will be integrated into BDO’s Potomac office. Bormel, Grice & Huyett, P.A., has been named one of the 2020 Best Accounting Firms to Work for. The annual list was created by Accounting Today and Best Companies Group. The firm ranked 16th nationally and No. 1 in Maryland. In addition, Accounting Today selects the Top 10 Best Firms for Women to Work For and named Bormel, Grice & Huyett, P.A., fifth in the nation on that list. Lanigan, Ryan, Malcolm & Doyle, P.C., has passed its most recent peer review. SEK, CPAs & Advisors will acquire the not-for-profit / governmental practice of Stambaugh Ness, a CPA firm located in York, Pa., that serves clients in more than 40 states. Krista M. Gardner, CPA, managing director of the not-for-profit / governmental practice at Stambaugh Ness, will join SEK as a member of SEK. Erin Fike also works exclusively with not-for-profit and governmental clients and will join SEK as a senior associate.

job openings TAX ACCOUNTANT NEEDED FOR BUSY SEASON. Joseph L. Stefanski, CPA, P.A. is looking for an individual with at least three busy seasons of experience. Hours are flexible. Situation is ideal for a parent with school age children. You can work when they are in school and be home when they are not. Located in Towson, MD, parking is provided. Please forward your resume via email to jlstefanski@jlscpa-pa.com or fax 410-339-3982.

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HOW TO SUBMIT A CLASSIFIED AD To submit a classified ad, contact Krislyn Suljak at krislyn@macpa.org, or 443-632-2307. REPLIES TO ADS WITH FILE NUMBER: Email krislyn@macpa.org, or reply via mail: Krislyn Suljak MACPA, Classified Ads 901 Dulaney Valley Road, Suite 800, Towson, MD 21204

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