March/April 2018

M A R C H /A P R I L 2 0 1 8

PROTECTING WHAT’S YOURS: BEST PRACTICES IN CYBERSECURITY Page 4

UNDERSTANDING THE TOP CYBER THREATS AND HOW TO PREVENT THEM

Page 6

AICPA CYBERSECURITY RISK FRAMEWORK

Page 8

A PRIMER ON CRYPTOCURRENCIES

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contents M A R C H /A P R I L 2 0 1 8

THE MAGAZINE OF THE NEW JERSEY SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS

4 Understanding the Top Cyber Threats and How to Prevent Them RALPH RALPH ALBERT ALBERT THOMAS, THOMAS, CGMA CGMA Chief Chief Executive Executive Officer Officer & Executive & Executive Director Director rthomas@njcpa.org rthomas@njcpa.org ELLEN ELLEN C. C. McM SHERRY, cSHERRY, CGMA CGMA Chief Chief Operating Operating Officer Officer emcsherry@njcpa.org emcsherry@njcpa.org DON DON MEYER MEYER Chief Chief Marketing Marketing Officer Officer dmeyer@njcpa.org dmeyer@njcpa.org RACHAEL RACHAEL BELL BELL Managing Managing Editor Editor rbell@njcpa.org rbell@njcpa.org KATHLEEN KATHLEEN HOFFELDER HOFFELDER Content Content Editor Editor khoffelder@njcpa.org khoffelder@njcpa.org

What can you and your clients do now to prevent cyber fraud? Is there a level of preparedness your firm can incorporate to ward off the simplest to the most complicated threats? While nobody is immune to cyber hacking, some protocols can ensure your firm is putting up its best defenses.

6 AICPA Cybersecurity Risk Framework

Cybersecurity is an enterprise risk that needs to be addressed by all levels of management.

Adhering to the AICPA Framework provides a good foundation for effective cyber risk management communication. Find out if your cybersecurity risk management program measures up.

8 A Primer on Cryptocurrencies

Digital assets are all the rage. Find out what the digital currency market is about, who is active in it, what kinds of cryptocurrencies are trading and what are some regulations being imposed.

MARC MARC L. L. REIN REIN Multimedia Multimedia Specialist Specialist mrein@njcpa.org mrein@njcpa.org 2 CLOSE UP

A Training Ground for Volunteers THE THE NEW NEW JERSEY JERSEY SOCIETY SOCIETY OFOF CERTIFIED CERTIFIED PUBLIC PUBLIC ACCOUNTANTS ACCOUNTANTS 425 425 EAGLE EAGLE ROCK ROCK AVENUE AVENUE SUITE SUITE 100, 100, ROSELAND ROSELAND NJNJ 07068 07068 973-226-4494 973-226-4494 | NJCPA.ORG | NJCPA.ORG #NJCPAMAG #NJCPAMAG READ READ NEW NEW JERSEY JERSEY CPA CPA ONLINE ONLINE ATAT NJCPA.ORG/ NJCPA.ORG/ NEWJERSEYCPA NEWJERSEYCPA DEDESIGN/ DE S IGN/ SIGNP/RODUCTI P RODUC RODUCT T ON I ON / / A DVERTISING ADVERTISIN G THE THE YGS YGS GROUP GROUP 3650 3650 WEST WEST MARKET MARKET STREET STREET YORK, YORK, PAPA 17404 17404 Advertising Advertising Contact: Contact: LAURA LAURA GAENZLE GAENZLE ACCOUNT ACCOUNT EXECUTIVE EXECUTIVE 717-430-2351 717-430-2351 laura.gaenzle@theygsgroup.com laura.gaenzle@theygsgroup.com

10 ACCOUNTING, AUDITING & ATTEST

The New Lease Accounting Standard: Don’t Delay Compliance 12 ADVOCACY & LEGISLATIVE ISSUES

The Novice CPA’s Guide to Legislative Action 13 BECOMING A CPA

The CPA Exam Can Be Really Hard… on Your Friends and Family!

14 BUSINESS ADVISORY SERVICES

Helping a Client Hire a CFO 15 CORPORATE ACCOUNTING

What to Consider When Creating a U.S. Presence as a Foreign Parent Company 16 FIRM & PRACTICE MANAGEMENT

KPIs: Going Beyond the Numbers

17 FORENSIC ACCOUNTING, LITIGATION SERVICES & BUSINESS VALUATION

Data Mining 18 PROFESSIONAL DEVELOPMENT

Recommeded Reading 19 TAX

Comforting Clients Through New Jersey Sales Tax Audits 20 TECHNOLOGY & INFORMATION MANAGEMENT

Switching to the Cloud? Conduct Due Diligence

21 NJCPA NEWS

yy Career Awareness Presenters Engage Next Generation of CPAs yy New Volunteer Award to Be Presented yy CPE Tracker Offers Members and Firm Administrators a Secure Tool to Manage CPE Requirements 23 CLASSIFIEDS 24 MEMBER STORY

Shaune Scutellaro, CPA

CLOSE UP

A Training Ground for Volunteers

BY KATHLEEN HOFFELDER, CONTENT EDITOR, NJCPA

Accounting firms can sometimes be reluctant to let their employees leave the office for non-client meetings, but if there’s a chance to educate a student about entering accounting or inform a young professional of the benefits of obtaining their CPA license, Deloitte is all in.

That’s because Deloitte has a culture in which volunteering is valued as much as client service. Its professionals represent almost 40 percent of the 110 NJCPA volunteers currently working as CPA Career Awareness presenters, where members speak at high schools about the accounting profession, their personal experiences and what sort of jobs are available in accounting. The presentations encourage students to explore careers in accounting and apply for NJCPA scholarships.

“This couldn’t be done without our professionals wanting to make an impact in the community and taking time out of their busy work schedules to give back,” explains Karen Lee, CPA, audit and assurance manager at Deloitte, noting that presenters come from all departments of the firm, such as audit, advisory, tax and leadership. Deloitte professionals are also involved in the NJCPA’s Student Programs and Scholarship Committee as well as the Emerging Leaders Council, which is an appointed leadership group that addresses the needs of members with up to 10 years of experience (formerly the Young CPAs Council) as well as numerous other interest group roles.

Encouraging young professionals to go into accounting, and stay in accounting, is high on their list, according to Lee. “It’s important to give back to the next generation

of CPAs in order to provide opportunities to skilled and talented individuals who could utilize their unique backgrounds and perspectives to add value to the accounting profession.”

To Joseph McGrath, CPA, audit and assurance senior manager at Deloitte, volunteering is an outlet to explain all of the interesting parts of his job. “Accounting and being a CPA is not just a desk job and is not boring. No two days of mine are alike, and I like to share that the profession has afforded me the chance to travel to places such as Germany, Switzerland and India, for example, and I have many opportunities to work directly with Deloitte senior leadership.”

When discussing the profession with students, he says, “the CPA exam doesn’t come across as being exciting.” But he makes them aware that as a CPA, you are a trusted advisor in the profession and at a very young age have the opportunity to work with the company’s senior leaders, giving you the opportunity to make an impact and leave your mark.

TWO WAY STREET Volunteering is often as much help to those who donate their time as those who are receiving the help. Young Deloitte professionals who may need a jump start when it comes to presenting and speaking in public often can get their feet wet at NJCPA events, says McGrath. To him, volunteering “is a training ground for young professionals to go out and network, and this is something that Deloitte fully supports.”

Lee agrees. “My involvement with the NJCPA Emerging Leaders Council has led

me to make connections with Deloitte colleagues and firm leaders while advancing the livelihood of our profession. I have also met professionals outside of Deloitte in a variety of industries,” she says.

The NJCPA Food Drive is a good example. Deloitte supports the Food Drive in two ways: 1) by sending professionals to support the annual NJCPA Volunteer Night at the Community FoodBank, and 2) by collecting food and monetary donations. In 2016, Lee and her coworkers were able to present the FoodBank with an $1,800 check. “Support from the New Jersey practice has been instrumental in not only encouraging its professionals to be involved in the community, but providing them with the resources to make the greatest impact,” she says.

Find out how you can get involved at njcpa.org/volunteer.

New Jersey CPA (ISSN 1534-6692) is published six times per year by the New Jersey Society of Certified Public Accountants, 425 Eagle Rock Avenue, Suite 100, Roseland, NJ 07068. Issue No. 66 Copyright © 2018 New Jersey Society of Certified Public Accountants. Annual membership dues include $9 for a one-year subscription to New Jersey CPA magazine. Members may not deduct subscription price from dues.

Periodicals postage paid at Roseland, NJ, and at additional mailing office. POSTMASTER: Send address changes to New Jersey CPA, 425 Eagle Rock Avenue, Suite 100, Roseland, NJ 07068-1723.

The materials and information contained within New Jersey CPA are offered as information only and not as practice, financial, accounting, legal or other professional advice. The opinions expressed herein are those of the authors and not necessarily those of the New Jersey Society of CPAs. Publication of an advertisement in New Jersey CPA does not constitute an endorsement of the product or service by the New Jersey Society of CPAs.

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MARCH/APRIL 2018 | NEW JERSEY CPA

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UNDERSTANDING THE TOP CYBER THREATS AND HOW TO PREVENT THEM

By SCOTT MAHONEY AND JOE RICCIE, CPA WITHUM

From a cost and compliance perspective, the potential implications that a cybersecurity breach has on a business — especially one within the accounting industry — creates risks that can’t be ignored.

Businesses need to take an offensive approach to protect themselves.

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Cybersecurity breaches are more costly in the United States than anywhere else in the world — with the average incident costing $7.45 million, according to a study performed by the Ponemon Institute in June 2017. This consists of four primary costs: yy Detection and escalation ($1.07 million) yy Notification ($0.69 million) yy Post response ($1.56 million) yy Lost business ($4.13 million) In the accounting industry, confidential PII (Personally Identifiable Information) and PHI (Protected Health Information) data is prevalent and must be maintained for several years in order to support clients if they are audited or sued. What CPA firms do to protect that data is imperative, not only for clients, but for the firm itself.

TOP CYBERSECURITY THREATS There are many types of cybersecurity threats out there, with more emerging each day. The most common types of threats that lead to incidents include: 1. Ransomware and similar deception tactics — tactics that require the use of tools to conceal, prevent or limit users from accessing their systems, files and data. In such incidents, the perpetrator typically blackmails the victim, threatening that the content will be exposed or permanently blocked without the payment of a ransom.

2. Social engineering — psychological manipulation of an individual(s), whereby the perpetrator masks their identity so that the individual performs

a particular action or provides confidential information. Common types of social engineering include: yy Phishing — sending emails that appear to be from a legitimate business source to a high volume of victims in an attempt to get the victims to provide confidential information, either via an emailed response or a link within the email. yy Spear phishing —the perpetrator sends a highly customized email in an attempt to obtain confidential information or an action by the victim (e.g. a masked request from the CFO to personnel requesting they process an immediate payment to the perpetrator). yy Baiting —leaving physical media that contains malware for a victim to unknowingly load into their computing environment. yy Tailgating —an attacker physically follows an authorized individual into a restricted area.

3. Password attacks — threat that occurs when a perpetrator attempts to gain access by cracking a user’s password.

Password-cracker software is readily available to support perpetrators in testing hundreds of millions of passwords per second to attempt to gain access to their protected environments, applications or data.

4. Man in the Middle (MITM) — threat by which a perpetrator secretly intercepts communications between two

parties by impersonating the party on each end of the communication to eavesdrop on the message or even alter the communication between the two parties. A means of identifying this threat is to closely inspect the website address as it is often misspelled or varies slightly from the intended party’s website (e.g., vvalmart.com).

5. Denial of Service (DoS) — targeted attack that aims to disrupt the availability of a system or network by sending high volumes of data or traffic until it becomes overloaded, thus inaccessible or disruptive to legitimate traffic.

With so many mechanisms for a cybercriminal to use, the question is no longer how can a company eliminate the possibility of being breached but rather when it will happen and how the company can reduce the impact.

COMPLIANCE IMPLICATIONS Due to the impact posed to consumers, regulations have been enacted to force organizations to proactively establish and maintain a cybersecurity program or face stiff financial penalties. To date there are a few regulations in place: the European Union’s regulation, General Data Protection Regulation (GDPR) and New York State Department of Financial Services Cybersecurity Regulations.

The AICPA has established System and Organization Controls (SOC) for Cybersecurity as a mechanism to aid organizations in demonstrating their cybersecurity practices to third parties and regulatory bodies.

Requesting your clients to obtain a SOC for Cybersecurity report as part of their process of evaluating third-party vendors handling their confidential information may alleviate some of the risk associated with using third-party vendors.

HOW TO MANAGE RISK In the accounting industry, one of the primary objectives is to minimize risk — audit risk, risk of material misstatement or otherwise. Managing the risk associated with cybersecurity incidents, including those threats previously identified, involves the same concept. It starts by understanding the risks, and the first step in that process is to

perform a data mapping exercise to identify what data you have, how it is used, where it is stored and how it is transmitted. Following that step, a risk assessment must be completed to identify the risks and determine what controls have been implemented to mitigate the identified risks. Simply relying on third parties to manage that risk is not sufficient. Many clients are quite surprised once they see the details of where data is stored and transmitted (i.e., who else in their vendor supply chain has access). Then there is a scramble to re-read vendor contracts and determine liability. When was the last time you checked in on your vendors and how much information they have?

2. It can reduce costs. Another study performed by the Ponemon Institute using 2016 data found that organizations can reduce the costs associated with an incident by up to 35 percent through implementation of a cybersecurity program.

CONCLUSION Preparing for breaches is not an exact science. As technologies continue to advance and programs change, new threats will continue to arise. Although costly, implementing a cybersecurity program is not simply a sunk cost. It does have two significant advantages.

1. It reduces the likelihood of a breach by enabling the organization to better protect themselves and limit their exposure from the occurrence of potential incidents.

READ MORE

TECHNOLOGY PLANNING

ARTICLES AND RESOURCES njcpa.org/topics/technology

Joe Riccie, CPA, is a partner with Withum and market leader for the firm’s Cloud Solutions & Management Consulting practice and Cyber & Information Security Services practice. He can be reached at jriccie@withum.com. Scott Mahoney is a senior manager with Withum and a team leader of the firm’s IT Audit, Security, Risk Management and Compliance services. He can be reached at smahoney@withum.com.

LEARN MORE APRIL 20, EAST HANOVER CYBER SECURITY/DISASTER PLANNING AND RECOVERY APRIL 26, PATERSON CYBER SECURITY Register at njcpa.org/events

NEW JERSEY CPA | MARCH/APRIL 2018

5

AICPA CYBERSECURITY RISK FRAMEWORK

By MARC D. MINTZ, CPA, CITP, CGMA

MARC MINTZ & ASSOCIATES, LLC

What role can the CPA play in protecting entities from the potential devastating results caused by a successful cyber-attack?

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MARCH/APRIL 2018 | NEW JERSEY CPA

The American Institute of CPAs’ latest assurance service, Reporting on an Entity’s Cybersecurity Risk Management Program and Controls, allows CPAs to be proactive in safeguarding clients’ cyber systems and data. Knowledge of this framework is useful in protecting a firm’s own data, even for practitioners with no interest in conducting such engagements.

With this newest addition to the System and Organization Controls (SOC) suite of services, the AICPA has redefined the term from “Service Organization Controls,” thereby expanding these examinations beyond their previous exclusive application to outside service organizations.

This broader definition now provides for system-level or entity-level internal control audits which can be performed for any type of organization. With the introduction of the SOC for Cybersecurity framework in April of 2017, the AICPA has also noted its intention to add a SOC for Vendor Supply Chains framework sometime in 2018.

It is important to understand that management is always responsible for identifying, assessing and mitigating cybersecurity risks. If such a plan is not in place, a more practical starting point may be to perform a non-assurance consulting engagement to provide information and recommendations to management so that an attestation engagement can be completed at some future date. For smaller, less-sophisticated clients, this non-assurance engagement may be all that is necessary or feasible. It is also significant to note that regardless of the cybersecurity plan in place, there will always

be the residual risk that a cybersecurity breach can occur and not be detected in a timely manner. This is really no different than a financial statement audit.

ELEMENTS OF A CYBERSECURITY RISK PROGRAM An effective cybersecurity risk management program is one that enables the entity to detect security events on a timely basis and to respond to and recover from those events with minimal disruption to operations. A cybersecurity risk management examination consists of two areas: 1. The description of an entity’s cybersecurity risk management program is in accordance with the description criteria.

2. The effectiveness of controls within that program to achieve the entity’s cybersecurity objectives are based on control criteria which were both suitably designed and operated effectively.

Both description and control criteria are suitable when they exhibit all the following characteristics: yy Relevance. Criteria are relevant to the subject matter being considered. yy Objectivity. The criteria are free from any bias. yy Measurability. Criteria allow for reasonably consistent measurements in either a quantitative or qualitative fashion. yy Completeness. Criteria are complete when subject matters prepared in accordance with them do not omit relevant factors that could reasonably be expected to affect decisions of the report’s users.

DESCRIPTION CRITERIA As paraphrased from various sections of the AICPA Cybersecurity Risk Management Reporting Framework, management’s description of the entity’s cybersecurity risk management program is designed to provide users with information about the environment. This includes identification of information assets and the potential threats against them including the policies, processes and controls that have been designed and implemented to respond to those risks. Systems to be included are defined in a very broad manner and include any information in electronic form used in processing, transmission or storage.

Manual, automated and partially automated systems should all be included as part of the description criteria. Additionally, all aspects of an entity’s operations are to be included, such as manufacturing, production systems, inventory management, distribution systems, treasury and funds management, and other types of back office systems.

Appendix C of the AICPA’s Framework provides 19 examples of descriptive controls broken down into nine categories as follows: 1. Nature of business and operations 2. Nature of information at risk 3. Cybersecurity risk management objectives yy Availability yy Confidentiality yy Integrity of data yy Integrity of processing 4. Factors that have a significant effect on inherent cybersecurity risks 5. Cybersecurity risk governance structure 6. Cybersecurity risk assessment structure 7. Cybersecurity communications and quality of cybersecurity information 8. Monitoring of the cybersecurity risk management program 9. Cybersecurity control processes CONTROL CRITERIA AND ISSUANCE OF A REPORT Appendix D of the AICPA’s Framework provides examples of control criteria which revolve around security, availability and confidentiality. Areas under which these control criteria fall include the following: yy Control environment

yy yy yy yy yy yy yy yy

Communication and information Risk assessment Monitoring activities Control activities Logical and physical access controls System operations Change management Risk mitigation Of course, deciding which criteria to apply, and under what circumstances, is always a matter of professional judgment.

As a rule, control criteria are suitable when they are: yy Specific. The objectives provide a clear understanding of the security risk that needs to be mitigated. yy Attainable. Their objectives permit the implementation of controls that, if suitably designed and operated effectively, provide reasonable assurance of achieving each objective. yy Measurable. An objective determination can be made as to whether each cybersecurity objective has been met. yy Relevant. The achievement of each cybersecurity objective supports the entity’s overall objectives. yy Time-bound. The objectives reflect the desired operation of the cybersecurity controls over time.

The cybersecurity risk management examination results in the issuance of an examination report consisting of three components: 1. Management’s description of the entity’s cybersecurity risk management program 2. Management’s assertion (as of a point in time or period of time) that:

yy The description is presented in accordance with the description criteria. yy The controls within the program were effective to achieve the entity’s cybersecurity objectives.

3. Practitioner’s Report rendering an opinion on the description and controls from management’s assertions Over time, it seems inevitable that the SOC Cybersecurity Report will become a staple of large entities with interested stakeholders. It also seems likely the AICPA’s SOC suite of attest services will expand.

Additional Resources yy SOC for Cybersecurity — bit.ly/SOCforCybersecurity yy Cybersecurity Risk Management Reporting fact sheet — bit.ly/CybersecurityFactSheet yy Illustrative Cybersecurity Risk Management Report — bit.ly/IllustrativeReport yy SOC Suite of Services — bit.ly/SOCsuite Marc D. Mintz, CPA, CITP, CGMA, is the managing member of Marc Mintz & Associates, LLC, a technology consulting firm that assists businesses with strategic planning and the selection and implementation of information technology systems. He is a former NJCPA Trustee and a past president of the Passaic County Chapter. He can be reached at marc@marcmintz.com or 973-808-9040.

NEW JERSEY CPA | MARCH/APRIL 2018

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A PRIMER ON CRYPTOCURRENCIES

By REN CICALESE III, CPA, MST

ALLOY SILVERSTEIN ACCOUNTANTS AND ADVISORS

Over the last several years, the economy has seen the development of new currencies in the national marketplace. Traditionally, a consumer would have to pay with either hard cash or credit when closing a transaction. Those are no longer the only options.

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Retailers such as Overstock.com, Microsoft, Shopify and others are now accepting cryptocurrencies as a payment method. Unfamiliar with cryptocurrencies? You’re not alone. You’ll need to become familiar with these types of transactions, as all signs point to them becoming more prominent in the market.

BLOCKCHAIN If a transaction is taking place in a virtual currency, it is using blockchain to complete the payment process. Blockchain is essentially a network of computers that maintain a database or ledger listing the transactions taking place. It is a public database that is stored on computers across the world. Blockchain has security built into the database that prevents the alteration of transaction data. In order for data to be altered, the world-wide computer network would need to be attacked at the same time. The inherent security within the database also allows for the easy verification of the data. Blockchain is a decentralized system, meaning there are no authorities maintaining rules or regulations.

Every blockchain transaction is encrypted with a private key and a public key. The

private key belongs to the owner of the cryptocurrency, and it is used to encrypt the data flow between the computer networks.

The public key is used by the computer network to decrypt the data. The network then uses a digital signature, which is a combination of the private key and transaction data, to verify the authenticity of the transaction.

All transaction data is presented in the form of blocks. In order for a transaction to be completed, all the blocks in the blockchain must be present.

As you can see, there are many benefits of using blockchain to complete a transaction. Using blockchain establishes an identity in a digital marketplace. The public key is how you are identified in the database, and the private key is protected and provides your consent to a transaction.

Also, the transactions are completed in a highly secured, decentralized database.

Blockchain is used in most virtual currency transactions, but it is also expanding into other areas in the marketplace. For example, banks are researching and developing methods on how to use blockchain in their businesses. Some banks have even gone so far as to develop new cryptocurrencies that can be used to transact busi-

ness. While Bitcoin is the most well-known of all the virtual currencies, there are many others available for use as well.

BITCOIN (BTC) As the most well-known cryptocurrency, Bitcoin leads the market in terms of volume and market capitalization. It has been in existence since 2009. Like most other cryptocurrencies, it uses blockchain and there is no central authority controlling it. In August 2017, Bitcoin went through a fork where it was split into two different virtual currencies. The fork resulted in the creation of Bitcoin Cash (BCH). The biggest difference between the two is that Bitcoin Cash can support about eight times as many transactions in a day than regular Bitcoin. As of early January 2018, the market capitalization of Bitcoin was roughly $236 billion, and the USD exchange rate was about $14,000/1BTC. The market capitalization of Bitcoin Cash was about $42 billion, and the USD exchange rate was about $2,475/1BCH. LITECOIN (LTC) Litecoin is a cryptocurrency that was developed in 2011. It is an open source currency that is being used globally. Litecoin uses blockchain to facilitate transactions, but it does this about four times faster than Bitcoin. It is not monitored by any central authority. As of early January 2018, the market capitalization for Litecoin was over $13 billion, and the USD exchange rate was about $240/1LTC. ETHEREUM (ETH) Ethereum is another alternative to Bitcoin.

It was developed in 2014. Like other cryptocurrencies, it uses blockchain to facilitate transactions and it is not monitored by any central authority. Also, Ethereum has the backing of large banks and other companies through the Enterprise Ethereum Alliance, an organization with the aim of increasing the use of Ethereum by businesses. As of early January 2018, the market capitalization for Ethereum was $130 billion, and the USD exchange rate was about $1,345/1ETH. One of the most beneficial features of Ethereum is that it allows for smart contracts. The basic premise of a smart contract is that it allows money to be exchanged after specific conditions are met.

As an example, assume a manufacturer sells products to an out-of-state customer. The customer purchases the products using an Ethereum smart contract, and it is agreed that the customer will provide payment once the products cross state lines. A smart contract would trigger payment to the manufacturer once the location condition is met. Not all virtual currencies have this ability, but Ethereum is one that does. Â RIPPLE (XRP) Ripple is a virtual currency that has been around since 2011. The cryptocurrency is part of the Ripple payment network. Essentially, Ripple is the credits used to make purchases on that network. One distinction from other virtual currencies is that Ripple uses its own payment protocol to facilitate transactions. As of early January 2018, the market capitalization for Ripple was roughly $73 billion, and the USD exchange rate was about $2/1XRP. TAX IMPACT Virtual currencies are being used more often to conduct business transactions.

Realizing this, the IRS provided guidance on the tax implications of using cryptocurrencies. IRS Notice 2014-21 specifically outlines how existing tax law applies to transactions where a digital currency is used in the transaction.

Major takeaways from the notice are that (1) virtual currencies are treated as property for federal tax purposes, (2) wages paid to employees using a digital currency are taxable to the employee, (3) virtual currency payments made to independent contractors are taxable and subject to self-employment tax rules, (4) the character of gains and losses on the sale or exchange of virtual currency depend on whether the virtual currency

is a capital asset for the taxpayer, and (5) any payment made using virtual currency is subject to the same reporting requirements as any other payment made in property. The IRS has created a Virtual Currency Issue Team, but no further guidance has been provided since 2014.

FINAL THOUGHTS In an ever-evolving marketplace, accountants must become familiar with new ways business is being conducted. Young entrepreneurs starting businesses today have an in-depth knowledge of virtual currencies and want to work with someone who has a similar knowledge base.

Over the last several years, cryptocurrencies have grown in popularity. While Bitcoin is the most common virtual currency, there are many others that can be used in the marketplace as well. Becoming more familiar with these payment options will allow accountants to better understand their clients and provide them with high-quality service.

Reynold Cicalese III, CPA, is an associate partner at Alloy Silverstein Accountants and Advisors. He is a member of the NJCPA State Taxation Interest Group and is a director with the Southwest Jersey Chapter. Ren can be reached at rcicaleseiii@ alloysilverstein.com, 856-667-4100 and on Twitter at @R3CPA. This content does not constitute a recommendation, endorsement or offering of the products described and serves to provide general information for educational purposes only.

LEARN MORE APRIL 24, KENILWORTH BLOCKCHAIN & ACCOUNTING/ DATA ANALYTICS Register at njcpa.org/events

NEW JERSEY CPA | MARCH/APRIL 2018

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ACCOUNTING, AUDITING & ATTEST

The New Lease Accounting Standard: Don’t Delay Compliance

BY KEVIN BOGLE, KPMG LLP

Although the 2019 implementation deadline for the new lease accounting standard seems a long way off, companies must begin preparing now. Compiling a complete inventory of a company’s lease agreements and key terms is a critical first step.

Consider: If each lease takes three hours to analyze, and a company has 2,000 leases — whether for buildings, vehicles, printers or other equipment — it may take three1 full-time employees a full year to complete building the inventory of leases and abstracting relevant information.

The new standard establishes a right-ofuse model and brings operating leases onto the balance sheet to improve transparency and comparability. The U.S. Generally Accepted Accounting Principles (U.S. GAAP) and the International Financial Reporting Standards (IFRS) lease models differ significantly in how a lease is treated, and both standards present nuances that can make implementation an involved task.

Early adoption among organizations has been low due to the complexities. In fact, some organizations have told the Financial Accounting Standards Board (FASB) that technological limitations may hamper their ability to comply with the standard by the due date. The new standard for U.S. GAAP companies becomes effective for public business entities for annual periods beginning after Dec. 15, 2018, and for non-pubCHART 1

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lic entities with annual periods beginning after Dec. 15, 2019.

A holistic approach for implementation can create advantages. See chart 1 below.

It is important to start preparing today.

Here are some suggested steps: 1. Establish a program management office (PMO) and obtain company leadership support.

2. Perform an assessment that includes the following: yy Inventory all leases to ensure completeness and accuracy. yy Review service contracts for embedded leases. yy Analyze sale-leaseback transactions, subleases, etc. yy Identify accounting and reporting gaps; identify data gaps. yy Determine a process to track and update leases that facilitates the accounting and disclosure requirements.

3. Design processes, controls and the implementation road map.

4. Implement the development of systems and processes.

5. Test Leasing involves coordination, communication and collaboration across an organization. Real estate operations, fleet management and information technology are typically the key owners of leases, and these groups may not have the accounting background to account for the leases or insight into an organization’s full lease portfolio. For U.S. GAAP, all leases are inscope; for IFRS, there is a practical expedient that may allow exclusion of ‘low value’ leases, generally deemed $5,000 or less.

Organizations should establish a teamfocused approach, with a solid understanding of all lease stakeholders. This can help ensure a comprehensive assessment that bridges the needs of localized operations

ACCOUNTING, AUDITING & ATTEST

with the accounting controls required by accounting and financial reporting groups.

An in-depth assessment of the new standard can be compared with a company’s current lease processes to identify what changes or new processes, policies and tasks are required to comply. Transition tasks often require updates to the ledger and recasting of balance sheet elements.

Table 1 lists the transition practical expedients available under U.S. GAAP, which may be different from IFRS. The FASB, in late November 2017, proposed additional practical expedients to ease transition and help preparers with implementation. The proposal would give companies the option to use the effective date of the new standard as their date of initial application in transition.

Companies that elect this option would not have to adjust comparative period financial statements (e.g., 2017 and 2018 for a public company following a calendar year end) for effects of the new standard or make the new required disclosures for periods before the effective date.

The new standard also requires various go-forward tasks and processes after day-one transition. Changes to leases (e.g., amendments, early terminations, exercise of options, variable lease payments and CPI increases) trigger reassessments to current accounting, making it important to continuously monitor a company’s lease portfolio and have internal controls established to meet the standard’s financial and disclosure reporting requirements.

With a clear understanding of the impacts associated with leasing, companies will be better positioned to select a tool to handle the monitoring and tracking and to ensure compliance and fit within a company’s system and process landscape. Here are six questions to consider when selecting a tool to supplement existing services: 1. Does the tool support dual reporting (U.S. GAAP and IFRS)?

2. Does the tool fully support foreign currency needs?

3. Does the tool capture items such as variable lease payments, short-term leases, the weighted average remaining lease term or weighted average discount

TABLE 1 PACKAGE OF PRACTICAL EXPEDIENTS

USE OF HINDSIGHT

On transition, an entity may elect not to reassess: yyWhether expired or existing contracts contain leases under the new definition of a lease; yyLease classification for expired or existing leases; and yy Whether previously capitalized initial direct costs would qualify for capitalization under the new leasing standards.

An entity may use hindsight: yyIn determining the lease term, assessing the likelihood that a lessee purchase option will be exercised; and yyFor lessees, in assessing the impairment of right-of-use assets.

Must be elected as a package, but can be elected separately from the use of hindsight expedient.

May be elected separately or together with the package of practical expedients.

Practical expedients are applied consistently to all leases — ­ i.e., all leases for which the entity is a lessee or a lessor — for leases that commence before the effective date.

rate to fully support the disclosure requirements?

4. Does the tool support tracking and recording impairment of the right-ofuse asset?

5. Will the tool (or its sponsors) provide support for ongoing updates as additional interpretive guidance and best practices emerge?

6. Does the tool have features that support effective project management and oversight of the accounting change project, which will entail the management of thousands of leases?

Organizations should also consider the impact of continued interpretive leasing guidance on tool selection. As ASC 842 can easily be considered a ‘living document,’ a service-based tool may simplify incorporating any new interpretive guidance while an existing tool may require upgrades.

The following steps will help determine whether a company will need a new lease accounting tool or can modify existing processes to comply: yy Determine the need for a tool or system depending on the complexity of the

company’s lease portfolio. yy Ensure that the process has the required controls and ability to generate the added disclosure requirements. yy Develop a plan and factor in time to test the process, remediate issues and allow sufficient time for external auditor testing.

The bottom line: start your lease adoption process as soon as possible so that you can develop a sustainable and repeatable process.

2,000 lease multiplied by 3 hours each, divided by 250 week days and 8 hours by day.

1

Kevin Bogle is a principal in KPMG’s Accounting Advisory Services group. He specializes in technical accounting, financial reporting and project management for complex transactions and accounting change under U.S. GAAP and IFRS. Kevin can be reached at kevinbogle@kpmg.com.

LEARN MORE JULY 23, ROSELAND LEASES: MASTERING THE NEW FASB REQUIREMENTS Register at njcpa.org/events

NEW JERSEY CPA | MARCH/APRIL 2018

11

ADVOCACY & LEGISLATIVE ISSUES

The Novice CPA’s Guide to Legislative Action

BY SHAUNE SCUTELLARO, CPA, COHNREZNICK LLP

If you had told me two years ago that I would be writing this article, I might have said that you were crazy. At that time, the closest I had ever come to being involved in legislative issues was meeting then New Jersey Governor Jim Florio with my soccer team at the age of seven. However, after a few meetings with an entrepreneurs group and an idea about how I could make a difference, I started on a crash course for beginners in advocacy. The key takeaway I can impart is, if you can find a position that you understand and can get behind, there are likely several ways to get involved in government and pursue your interest in making a difference.

DO YOUR HOMEWORK Along my journey to advocacy, there were many lessons learned. First, in order to add something productive to the legislative process, it is vital to know and understand the subject matter in great detail. As such, doing your homework is the first step towards making a difference. For example, my work with New Jersey’s life sciences and technology community led me to an entrepreneurs group developing a white paper advocating for ways to improve the community. I was able to lend my expertise in tax matters to the group and draft a

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section of the paper. As a CPA specializing in tax for close to 15 years, the impact of a potential tax change was a very familiar subject area to me and one that I could delve into deeply.

UNDERSTAND THE IMPACT My next lesson learned was that the process was not as simple as getting my thoughts on paper and driving them down to Trenton. First, I had to understand the impact of the potential bill and determine federal and state treatment throughout the U.S. to get an idea of current law on the subject. Second, NJCPA gathered a panel of experts to thoroughly review the idea and develop an understanding of the potential impact of the law change.

GATHER SUPPORT Next, it was time to gather support for the potential bill. In addition to reaching out to New Jersey industry groups and trade organizations that might also back the bill, support in Trenton via state senators and assembly members who would sponsor the bill was necessary to keep the process moving. Finding common ground on both sides of the aisle seems harder than ever these days; however, my experience in this en-

deavor has been that good ideas still have the power to bring people together. Once a sponsor is found, then the bill is drafted, reviewed and put forth for a potential vote.

If making a difference on your own sounds impossible, I would agree with you. I was not able to get involved in the governing process without the help of several other people. Most importantly, the NJCPA’s government relations director, Jeff Kaszerman, brought me along as a neophyte and introduced me to the process of taking an idea to Trenton and making it a reality. Even though I had no prior experience in the legislative process, I am looking forward to the ultimate resolution of my proposed idea, and, hopefully, finding the next big idea that can make an impact for New Jersey business owners, investors and the accounting community here in the state.

Shaune Scutellaro, CPA, is a senior manager with CohnReznick LLP. He is an NJCPA Trustee, a past leader of the NJCPA Federal Taxation Interest Group and a member of the Content Advisory Board. Shaune can be reached at shaune. scutellaro@cohnreznick.com.

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LEGISLATIVE ACTION CENTER njcpa.org/advocacy

BECOMING A CPA

The CPA Exam Can Be Really Hard… on Your Friends and Family!

JUAN ARANA, WILKIN & GUTTENPLAN, P.C.

Whether you decide to run a marathon, hike the Appalachian Trail or sit for the CPA Exam, one thing is certain: you need to be committed to your success. CPA candidates have to be dedicated to their studies, which is a huge time commitment to not only them but also to their family and friends. But in the end, passing the CPA Exam is one of the most rewarding feelings and makes the journey well worth it.

When I was contemplating the decision to sit for the exam, I recall the conversation I had with my wife about the benefits of becoming a CPA and the amount of time I would have to dedicate to studying. I had to let her know that I would be committing to one to two hours per weeknight after work, along with six to eight hours on the weekends for approximately 18 months.

Although she was very supportive and understanding, we were both unaware of just how difficult the next year was going to be.

While some candidates have a general understanding of the time involved, most don’t fully understand how the CPA Exam can truly impact their daily life. For example, waking up in the middle of the night to check your scores will become your new norm. I found myself glued to the computer screen at 12 a.m. eagerly awaiting the scores to show up only to realize that the NASBA website had become unresponsive due to the traffic overload from too many candidates doing the same thing.

Once the webpage loaded, I remember how relieved my wife and I were that I passed my first section. As she headed back to bed, she quickly congratulated me and added how tough the prior three months had been for her. It was then that I realized that it does not take long before your family and friends start to express how the CPA Exam takes a toll on them.

In the beginning, I didn’t fully understand how my dedication to studying for the Exam was taking a toll on my wife.

After all, I was the one who was putting in the late hours of studying. What I didn’t

take into account was that my wife was juggling her career and most of the household chores alone. Let’s be honest, how would you feel if your significant other stopped spending time with you or you now had to wash the dishes every night without any help? Shared tasks like walking the dog, cooking dinner, cleaning the house, laundry and groceries were being done mostly by my wife while I was listening to my CPA instructor on the computer.

Looking back, passing the first section was the most difficult for two reasons.

First and most importantly, I realized it was taking a toll on my wife, and secondly I was still searching for the best and most efficient study method to pass the remaining sections.

There are a few things you can do to help balance your personal and professional life. The key is to find the most efficient study method that works best for you. This will allow you the flexibility to manage personal relationships while focusing on your studies. Going on a date, helping with chores around the house or

grabbing a drink with your best friends is a great way to recharge your mind.

Not only will this help you manage your personal relationships, it will also give you the motivation to move forward with your studies.

The CPA Exam is considered to be one of the most difficult of all professional licensing exams. I can say with confidence that I could not have passed all four sections without the help and support of my wife, family and friends. There are many tools available to help aspiring CPAs with the exam and licensing process. The online resources from njcpa.org and aicpa.org are a great place to start.

Juan Arana is an accountant with Wilkin & Guttenplan, P.C. and is pursuing his CPA license.

He is a CPA Candidate member of the NJCPA and can be reached at jarana@wgcpas.com.

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CPA EXAM INFORMATION

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NEW JERSEY CPA | MARCH/APRIL 2018

13

BUSINESS ADVISORY SERVICES

Helping a Client Hire a CFO

BY COLLEEN CULLARI, CULLARI CARRICO LLC

Helping a client with hiring a chief financial officer (CFO) can be a daunting task. You could read 100 articles describing what a CFO is and get 100 different descriptions, because they are all relevant to what each individual company is looking for in a CFO. In the past, a CFO was charged with having insight to the overall financial direction of the company — performing cash flow analysis, financial planning and notifying the board of directors about how the company is doing financially based on management’s strategic business plan. More frequently, the board and other members of management now expect CFOs to assist in developing the strategic business plan and contributing to how it is carried out based on the company’s finances.

However, in smaller entities, the CFO’s job responsibilities could carry over into other areas as well. As with any hiring decision, the expectation lies in the job description, not the title. Helping a client hire a CFO is the easy part, but understanding your client’s needs, working with them to develop a well-thought-out job description and offering opinions regarding the type of CFO they hire and how to ultimately evaluate that individual’s work product is the challenging part.

DEFINING THE ROLE Helping a client hire a CFO has more to do with helping the client determine their true financial needs than actually assisting them with finding someone — that can be left up to the recruiting team. Typically, identifying the problem in current financial operations will assist in developing the solution or, in this case, the job description. Is the client struggling with transparency in financial reporting whereas the board is looking for a clearer picture of how the company is doing? Or, is the CEO a great forward thinker for the company but lacks the financial knowledge to negotiate pertinent contracts, which is where the new CFO would step in? Consequently, the applicant who may flourish in finan-

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cial reporting may flounder at negotiating contracts and vice versa, but both identified issues could be construed as a CFO type of job responsibility. Assisting your client with developing an appropriate job description based on their business needs is crucial to having success in this process.

EVALUATING THE CANDIDATES After weeding through resumes and having numerous initial interviews, there comes a point when upper management and the board will have to make a decision regarding who to hire. Helping the client determine the type of person best suited for the job can be a challenge in itself. The client may ask if they should hire an applicant who has developed organically within the company or hire someone from an outside independent search. They may ponder whether to seek an individual with many years of experience to handle complex matters or a younger candidate who is eager to learn and change with the company’s goals and objectives. All types of applicants have their pros and cons, but the CPA can help to further understand the client’s needs and give consultative advice as to the type of applicant who would best transition into the role smoothly and perform well.

OUTSOURCING IS AN OPTION Sometimes, when the search becomes a long process, the client’s best option may be sitting across the table from them. External CFO services have become a fast-growing alternative for many CPA firms.

FOLLOWING THROUGH Many times, a CPA helps a client find a CFO, but fails to carry through to ensure the relationship is one that is positive. It is important to educate clients on how to appropriately evaluate the CFO’s position annually to ensure success. Within the first year, the CFO should be assessed on how well they carried out the board’s and management’s plan for them, based on the job description for which they were hired. However, going forward, it is the

CFO’s job, together with other members of upper management and ultimately the board, to make decisions about the future financial position of the company. It is the CFO’s responsibility to plan future outlooks and have them approved by the board. Annually, this individual should be evaluated by how well they performed the job responsibilities they set out for themselves. This will ensure that the client’s needs are met for the long term and demonstrate that your consultation was truly a value-added service.

Colleen Cullari is the audit services supervisor at Cullari Carrico LLC. She is a member of the NJCPA Accounting & Auditing and Nonprofit interest groups and can be reached at ccullari@ cullaricarrico.com.

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ARTICLES AND RESOURCES njcpa.org/topics/advisory

CORPORATE ACCOUNTING

What to Consider When Creating a U.S. Presence as a Foreign Parent Company

BY MICHAEL J. COLETTI, CPA, AND SHEILA J. GRICE, CPA, MAZARS USA LLP

Every day, international companies come to America. Foreign trade initiatives and advances in technology continue to pave the way for global expansion, and the consumer outlook in the U.S. is strengthening alongside the economy. As such, entering the U.S. market is attractive, but establishing a business in America can be challenging. The top considerations when entering the U.S. market include the following: 1. Formation and structure of the U.S. entity 2. Location of operations, including offices, employees, inventory and customers 3. Accounting and operational support FORMATION AND STRUCTURE OF THE U.S. ENTITY There are various ways in which a foreign company can form an entity in the U.S., whether through a subsidiary, a branch, a joint venture or a partnership. Each structure has its pros and cons, depending on the business plan and the ultimate exit strategy. Typically, for a foreign company the go-to structure is a corporate subsidiary where that entity pays U.S. federal and state income taxes on its taxable income, with the other structures having an allocation approach to taxable income.

Other factors to consider include how the entity will be capitalized (debt or equity or both), whether the U.S. operations will be profitable in the first few years and, if not, how the operations will be funded. There should be some type of initial equity contribution to satisfy the IRS rules.

Funding the U.S. company with debt is the preferred method, because with the foreign entity as a secured creditor, repaying of the debt would be tax free, and there would be an interest deduction. While these are some highlights, there are complicated rules around this type of foreign transaction, so it’s important to ensure they are documented properly. Finally, the organization as a whole should be taken into consideration when deciding how and

where the U.S. entity will be formed and the impact of any compliance requirements under U.S. law.

LOCATION OF OPERATIONS The foreign company normally determines its U.S. location based on the location of a major customer or the demand for its product. Another consideration is the tax incentives offered by federal, state and local jurisdictions, which can generate significant tax savings for the company. Doing business in multiple states also holds the potential of creating tax nexus, which may add additional filing requirements for the entity. This includes formal business registrations to obtain authority to conduct business in each nexus state. The requirements of the various jurisdictions are sometimes difficult to understand for a foreign company. An example of creating nexus would be when inventory is direct shipped or stored at a customer’s facility, but the sale of the inventory has not been recognized.

Employees are another key component to the decision, whether to hire U.S. citizens and/or to have non-resident aliens transfer from the foreign country to work in the U.S. Usually, the foreign company wants to have personnel familiar with their products, culture and the management team, but typically these individuals do not adapt to the U.S. marketplace and struggle with the complexities of regulation and tax compliance. In the end, it’s important for the foreign national to have good advisors or hire a U.S. citizen with industry experience.

ACCOUNTING AND OPERATIONAL SUPPORT Consideration should be given to the potential financial transactions of the U.S. entity: yy If the U.S. entity will transact business with its foreign parent or commonly owned foreign entities,

consideration should be given to transfer pricing regulations. yy The hiring of employees will subject the U.S. entity to compliance requirements under state and local labor laws including payment of minimum wages, mandatory insurance, employee benefits and employer taxes. yy A U.S. bank account should be opened in most cases for the U.S. entity to receive customer payments and direct payment to suppliers. yy Select a system for recordkeeping and give special consideration to combining the U.S. entity’s financial activity with other organizational entities. A cloud-based system that is accessible internationally allows all parties to review financial transactions regardless of time zone.

These are the challenges that tend to arise first for international companies seeking to enter the U.S. market, no matter the nature of the business or the specific industry. Having a good management team in place to plan and work with advisors is critical to facilitating the process and getting the entity securely established.

Michael J. Coletti, CPA, is a partner with Mazars USA LLP. He is a member of the NJCPA Retirement Savings Committee and the Accounting & Auditing Standards and Cooperation with Bankers interest groups. Michael can be reached at Michael.Coletti@mazarsusa.com. Sheila J. Grice, CPA, CGMA, is a senior manager with Mazars USA LLP. She is a member of the NJCPA and can be reached at sheila.grice@mazarsusa.com.

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ARTICLES AND RESOURCES njcpa.org/topics/corporate

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NEW JERSEY CPA | MARCH/APRIL 2018

15

FIRM & PRACTICE MANAGEMENT

KPIs: Going Beyond the Numbers

BY JOSEPH A. TARASCO, ACCOUNTANTS ADVISORY GROUP, LLC

Accounting firms of all sizes have been challenged to measure and manage partner performance using quantitative Key Performance Indicators (KPIs) for partner performance. Such KPIs include revenue per partner, new business generated, chargeable hours, partner realization rates and write-offs. Certainly, these metrics are fundamental measurements of a partner’s performance. Quite often, however, the details are buried in the metrics and overlooked, and analyzing them may tell a different story.

For instance, if KPIs are designed with an emphasis on strict metrics based on current-year results, then investments of partner time to secure the future success of the firm will suffer. Partners will aim to achieve those KPIs for which they will be rewarded today. For example, if “book of business” is a significant measurement, then partners will be less likely to transition clients to younger partners. If chargeable hours are highly emphasized, then partners may not spend the time necessary to nurture and monitor staff or devote time to firm management.

While traditional quantitative KPIs are valuable, they are retrospective measures that only provide a view of the past and lack the ability to reveal a comprehensive mode for future partner performance and strategic goal setting.

A proper balance of quantitative and qualitative criteria works best for the one firm-firm philosophy and for implementing succession plans.

To follow are some examples of qualitative KPIs for partner performance: yy Has a clear understanding of what clients need and deserve. Clients seek the partner’s advice and counsel and the partner is truly considered a trusted advisor in all aspects of their clients’ major business and personal financial decisions. Generates additional revenue from clients. yy Respects other partners and employees of the firm and is both client and staff centric. Is a mentor and counselor

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yy

yy

yy

yy

yy

yy yy yy yy yy

who is fair and objective. The firm comes first before personal gain.

Is entrepreneurial and takes calculated risks to grow and improve the firm. Is willing to invest personal capital into the firm.

Has a strong network of relationships with professionals outside of the firm, such as attorneys, bankers, high-networth individuals and corporate executives. Has excellent practice development skills and engages an appropriate volume of new business each year.

Consistently receives referrals from “centers of influence” and clients.

Recognized by partners and staff as a trusted leader and manager of the firm. Is a role model to young and aspiring partners. Willing to make tough business decisions for the firm. Has the ability to remain calm in times of crisis.

Doesn’t make emotional decisions.

Has a vision for the firm’s future and works towards achieving personal and firm goals and objectives. Is a team player. Prioritizes the needs of the firm, and takes the initiative to complete needed tasks and projects on a timely basis.

Is willing to delegate interesting and challenging work and transition clients to up-and-coming partners. Understands the benefits of continuously upgrading the client base and the value of succession planning.

Is willing to be held accountable for performance. Makes no excuses for underachieving.

Continuously stays up-to-date on market and business trends and upgrades technical skills each year.

Communication skills are clear, concise and confident when dealing with clients, staff and prospects.

Has enthusiasm and a positive attitude for the profession, the firm and clients.

Understands the business of public accounting and the importance of increasing profitability each year. Has a

history of timely billing and collections, along with high client realization. yy Is willing to assist in resolving conflict between partners and the staff by acting as a liaison between people in the firm. yy Leads change initiatives and projects.

Inspires and persuades partners to adapt to the changes and trends in the marketplace.

There is no universal model for using KPIs in identifying, measuring and developing the performance of partners and aligning performance with the strategic goals of the firm. Every partner’s performance situation is different. Some partners possess natural talents to achieve the required KPIs on their own and others need to be guided. Nonetheless, all partners can benefit from a formal partner mentoring and coaching program. This process should include structured and ongoing efforts to assess partners’ progress toward developing expected competencies and achieving or exceeding KPIs. Joseph A. Tarasco, CEO and senior consultant, Accountants Advisory Group, LLC, assists the leaders of public accounting firms by consulting in all areas of firm practice management, including succession and strategic planning, firm governance, mergers and acquisitions, partner compensation structure, practice development, facilitating partner retreats, and leadership consulting. He is a member of the NJCPA Content Advisory Board and can be reached at joe@accountantsadvisory.com.

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FIRM & PRACTICE

MANAGEMENT ARTICLES

AND RESOURCES njcpa.org/topics/firm

FORENSIC ACCOUNTING, LITIGATION SERVICES & BUSINESS VALUATION

Data Mining

BY SUSAN CINNELLA-FIRRIOLO, CPA

Innovations in technology are changing the world. In exchange for certain conveniences, we allow organizations to collect details about us. And all of those details are being stored in databases. However, most databases are unstructured, making it challenging for CPAs and others to work with.

That’s where data mining comes in.

WHAT IS DATA MINING? Data mining allows people to find useful information in large databases. Simple definition? Yes. Simple process? No. Evolving from calculus, data mining is a mix of three mathematical specialties: statistics, artificial intelligence (AI) and machine learning (ML).

WHY IS DATA MINING IMPORTANT TO CPAS? Data mining automates repetitive, timeconsuming tasks. Despite the efficiencies data mining creates, it is underutilized in the accounting profession. However, CPAs who are Certified in Financial Forensics (CFF) and Accredited in Business Valuations (ABV) have wasted no time adopting the technology.

Pretend you’re hired to perform a forensic investigation for the Pharaohs in the Egyptian desert. Several bars of gold are missing from the pyramids. The Pharaohs believe workers are taking them. As you walk through the desert, you wonder if the sand holds the answers. You could manually sift through the sand looking for proof, but you realize this will take too much time, the Pharaohs will think you’re stupid and you will not get paid. You decide a better idea is to use an advanced metal detection system. After the system learns what information to search for, you put it to work in the sand. A few seconds later, the system returns its findings and you analyze the data. You discover the workers are in collusion with cattle herders. The herders distract the Pharaohs while workers steal the gold and hide it in the sand. After the cattle are corralled, the Pharaohs go back to the pyramids. The

herders retrieve the gold and bring it back to the village. In this example, the sand is unstructured data, the findings are useful knowledge, the learning is machine learning and the system is data mining.

CYBERATTACKS, FRAUD AND FORENSICS Data mining for cyberattacks is tricky because malware patterns are constantly changing. Predictive analysis is powerful, but it’s not enough to fight cybercrime.

Consider the massive data breach at Equifax.

Data mining exposed a vulnerability in an open platform used by the consumer credit bureau. A software update was issued by the developer which would have patched the weakness in no time. However, Equifax disregarded the update and, as a result, exposed the personal, sensitive information of over 145 million consumers.

Data mining for patterns or outliers can expose fraud. Without professional doubt, fraudulent transactions may be overlooked, dismissed or just avoided.

In the WorldCom situation, WorldCom refused to give auditors access to the entire accounting system. So auditors used data mining to discover a fraudulent $1.7 billion journal entry.

BUSINESS VALUATION: SCIENCE OR ART? Business valuation is a specialty based on statistics and judgment. Forecasting (sometimes confused with guessing) is affected by so many variables, but it tends to be the most practical method of valuation.

Despite advanced data mining methods, predicting the future is challenging. Valuations rely on math which is limited by the quality of data. In 1997, many people thought a $6 million valuation of Amazon was pulled out of thin air. Nevertheless, Amazon’s IPO valued the then internet bookseller at $438 million mostly due to rapidly increasing revenue projections.

Now, 20 years later, Amazon is valued at around $464 billion. Did early investors buy into the metrics or the idea, or a combination of both?

WHAT’S THE FUTURE? Without a doubt, data mining is taking over activities traditionally performed by humans. But this doesn’t mean all jobs will be surrendered to machines. Did cashiers disappear after scanners were created?

Data mining will become part of every business process, relieving CPAs of menial tasks and freeing them up to provide more value-added services. As this happens, the accomplishments and skills of highly specialized CPAs will be in more demand.

Susan Cinnella-Firriolo, CPA.CITP, CGMA, CISA, is a member of the NJCPA Accounting and Auditing Standards Interest Group and can be reached at 973-223-8473.

LEARN MORE JULY 12, ISELIN FORENSIC ACCOUNTING: FRAUDELENT REPORTING AND CONCEALED ASSETS Register at njcpa.org/events

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17

PROFESSIONAL DEVELOPMENT

Recommended Reading

BY ANDREA DIAZ, CPA, SKC AND CO., CPAs, LLC

What do most successful people have in common? They read! It’s no surprise that when I asked the folks at my firm for their favorite professional development books, the partners were the first to respond. All the partners I spoke with followed advice from various books they’ve read over the years of their career, and one partner even stated that one of the books mentioned below had a big influence on building our firm, which has a long-standing reputation for sincere and exceptional client interaction.

I know you’re probably thinking that you barely have time to read to keep up with current tax law changes or recent Financial Accounting Standards Board implementations, but I guarantee you that an investment in your professional development will help you to become one of the most valuable staff at your company.

Reading books outside of industry-specific material will not only increase your awareness of your clients, but it will improve your professionalism towards everyone in your organization, from entry-level staff to managing partner or CEO, which will set you apart from the accountant who knows only how to perform technical responsibilities. I’ve compiled a short list of books that were instrumental in my professional development during various stages of my career. yy Early on: Rise: 3 Practical Steps for Advancing Your Career, Standing Out as a Leader, and Liking Your Life by Patty Azzarello. Rise may have the most simplistic and real-world advice

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on getting to where you want to be in your career written by an expert whose experience is impressive to anyone reading her work. yy Next steps: True Professionalism: The Courage to Care about Your People, Your Clients and Your Career by David Maister. What’s the difference between a true professional and someone who just clocks in from nine to five?

According to David Maister: passion.

In this book, Maister focuses on professional service organizations, such as accounting firms, and captures and defines what it is to be a true professional. He writes about having passion for your profession and how the difference is so clearly reflected between those who do not share the sense of passion and care towards their clients, their staff and their career. He writes, “Believe passionately in what you do, and never knowingly compromise your standards and values. Act like a true professional, aiming for true excellence, and the money will follow.”

These are words to live by. yy Getting better: Good to Great: Why Some Companies Make the Leap and Others Don’t by Jim Collins. This book details a case study of 25 public companies that went from good to great during a 10-year period while other comparable companies in their same sector did only mediocre as evidenced by their stock prices. While the study is on large public companies as a whole, it speaks deeply about the people in

the good-to-great organizations and the difference in the characters of the leadership to those in the comparable mediocre companies. The people on your team, including you, will be the difference between good and great.

“The old adage ‘People are your most important asset’ is wrong. People are not your most important asset. The right people are,” says Collins. yy A classic worth re-reading at all levels: A Passion for Excellence: The Leadership Difference by Tom Peters. This is the book that largely influenced the founding values of our firm. More than one partner gave high praise to this literary piece. Although an older book, it is still extremely relevant and well worth taking the time to read. yy Last but not least: Getting Naked: A Business Fable About Shedding the Three Fears That Sabotage Client Loyalty by Patrick Lencioni. Unconventional to most professional development books, it is narrated as a fictional story, but the message is clear. Exposing your vulnerabilities, or “getting naked,” will improve your relationships with clients and others in your organization.

As you continue to grow and advance in your career, it will become apparent that the importance of your professional interaction is as important as your technical skills. Happy reading!

Andrea Diaz, CPA, ABV, MST, is an accountant at SKC and Co., CPAs, LLC. She is a member of the NJCPA and can be reached at adiaz@skcandco.com.

TAX

Comforting Clients Through New Jersey Sales Tax Audits

BY CHRISTOPHER R. CICALESE, CPA, MSTFP, ALLOY, SILVERSTEIN, SHAPIRO, ADAMS, MULFORD, CICALESE, WILSON & CO.

Receiving a New Jersey audit notice in the mail frequently results in an immediate phone call from a client. They expect you to know why they were selected and how much this is going to cost them. While the “why” of the matter may not be known until the audit process is underway, the “how much” often depends on various things that are sometimes out of the client and CPA’s control.

WHY ME? Clients usually do not understand why they were selected from the taxpayer pool to be checked up on by the state to see if they are doing things correctly. Officially, the New Jersey Audit Selection Group uses established criteria, public records and information from other taxing authorities to select taxpayers for audit. New Jersey auditors are not supposed to reveal to taxpayers why they were selected for audit. However, CPAs often can build a relationship with the auditor over the course of the audit and may gain some insight as to what the taxpayer may have been doing wrong. If the auditor points out something clear, such as income tax return revenue not equaling the total of all sales tax returns, that most likely is the reason for audit.

Sometimes a taxpayer may think they are being picked on as they feel they get audited too often. If the same entity was recently audited, they should understand that the state is coming back to see if you made the necessary corrections. Any time a taxpayer is audited, it is almost guaranteed the state will come back in a few years. One of the official reasons for a New Jersey audit is even called something similar to a check back. During audits, the taxpayer is required to list all related entities. If the entity that originally was selected to be audited was found to owe money, the related parties could potentially get an audit notice within a few years.

HOW EXPENSIVE IS AN AUDIT? Primarily, the costs of an audit focus on unpaid tax, penalties, interest and CPA

representation. Upon hearing that, a client may immediately think they can handle the audit themselves without representation as a means to cut costs. However, what they may not understand is that without proper representation, they could potentially make the audit even more expensive. By answering an auditor’s questions incorrectly or providing too much information, the client could unintentionally encourage the auditor to expand the scope of the audit.

At the same time, by providing poor or irrelevant records, the auditor may begin including things in their assessment that the original audit did not cover simply because they had the information in front of them and were able to make a conclusion that money was owed.

The best way to keep the costs of an audit down is to provide clean information to an auditor. Clients need to be educated prior to an audit about the importance of keeping records maintained at all times. As a start, they should save receipts, maintain vehicle logs, update tax exemption certificates, review invoices for sales tax and keep backup for paid use tax. These records need to be organized, easily accessible and legible so that an auditor can review them quickly and efficiently. Having good records often translates to less time the CPA needs to spend representing them before the state and helps build trust with the auditor.

CAN AN AUDIT BE PREVENTED? There is almost no way to avoid being audited. Eventually, whether taxpayers are doing something wrong or not, they will be selected to be audited. Having a knowledgeable CPA with experience can help prevent taxpayers from being audited as they are more familiar with the criteria the state is reviewing to select who to audit.

They can do their own checks while performing the normal course of work to see if there are any red flags. CPAs cannot prevent audits entirely, but they can decrease

the likelihood of being audited simply from their expertise and experience.

Overall, audits are not always the best experience and sometimes can interrupt the normal course of business. As trusted advisors for clients, it is important for the CPA to work with clients to not only help them work through the audit unscathed, but also educate them and help them be more comfortable with the process.

Christopher R. Cicalese, CPA, MSTFP, is a manager at Alloy, Silverstein, Shapiro, Adams, Mulford, Cicalese, Wilson & Co. He is a member of the NJCPA and can be reached at 856-667-4100, ccicalese@alloysilverstein.com or on Twitter at @ AthleteCPA. READ MORE

STATE TAX ARTICLES

AND RESOURCES njcpa.org/topics/statetax

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TECHNOLOGY & INFORMATION MANAGEMENT

Switching to the Cloud? Conduct Due Diligence

BY CHRISTOPHER M. CHUDYK, CPA, CITP, AND RANDY RUDZIK, TRAPHAGEN FINANCIAL GROUP

Times are always changing, and technology is always advancing. Ninety-five percent of offices across the world store the majority of their information on the cloud using services or software such as Mega, Box, NextCloud, Google Drive, DropBox, OneDrive, SpiderOak, iDrive, pCloud and Apple iCloud. Cloud services are not only meant for storing data, they are also meant for sending or transporting data.

When a company uses cloud services, it provides the opportunity for it to focus on its core business while avoiding computer and network maintenance.

TYPES OF CLOUD COMPUTING Cloud computing consists of Infrastructure as a Service (IaaS), Platform as a Service (PaaS) and Software as a Service (SaaS). These offerings differ based on the level of cloud that you manage versus your service provider. SaaS has everything managed by the company; for PaaS you would manage the data and applications; and for IaaS you would manage applications, data and run time.

There are three different models: private, public and hybrid. Private networks are highly secure and typically are for one organization. Public clouds are owned by the service provider and have the highest level of efficiency in sharing resources. Hybrid clouds incorporate both private and public features.

DUE DILIGENCE Why is due diligence so important when switching data to the cloud? You want to verify that the provider you are relying on has all the necessary safeguards against any possible threats. There are daily instances of familiar businesses being hacked and social security numbers stolen, or hackers encrypting data or networks until a ransom is paid. Selecting the right vendor for your company’s needs is half the battle; the second half is making sure the vendor and your own firm have the necessary safe guards to protect your and your clients’ data.

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MARCH/APRIL 2018 | NEW JERSEY CPA

Elements to consider include: 1. How much storage is available?

2. What are the download and upload speeds?

3. Backups yy How long does it take for a backup to be restored? yy How many backups are retained? yy Where are the backups stored? yy How often is data backed up?

4. Does the vendor and your own firm have a disaster recovery plan?

5. What is the cost and efficiency of switching support plans and how long does it take for a service restart in case of maintenance or power outage?

6. What level of encryption is applied?

7. What is the policy on the complexity of passwords and the frequency that passwords must be changed?

8. What technology policies and procedures does the vendor and your own company have? Are all employees required to sign off on them?

9. Does the vendor use dual authentication to be able to log in (e.g., after logging in, a code is sent to your cell phone)?

10. Has the vendor gone through penetration testing where an outside party tries to penetrate their company and then, based on those results, takes appropriate actions to alleviate the risk?

11. Does the vendor have annual technology audits (SAS 70; SOC 1 and 2)? Be sure to get a copy of the audited statement.

12. What are the support options (tickets, instant messaging, phone calls) and what are their respective wait times?

13. Is your company covered with cyber insurance?

14. What other companies use a vendor/ provider that your company is considering?

15. Do you see any warning signs on the company’s website or social media accounts?

Moving to the cloud is an old topic, but if you don’t take the necessary precautions

(due diligence) in selecting the correct providers, your company could be the next name in the headlines. Stay out of the news by selecting the correct vendor and doing your due diligence.

Christopher M. Chudyk, CPA, CITP, is a partner at Traphagen Financial Group. He is a member of the NJCPA Student Programs & Scholarship Committee and can be reached at chris@tfgllc.com.

Randy Rudzik is a staff accountant with Traphagen Financial Group. He is a member of the NJCPA and can be reached at randy@tfgllc.com.

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NJCPA NEWS

Career Awareness Presenters Engage Next Generation of CPAs

BY KATHLEEN HOFFELDER, NJCPA CONTENT EDITOR

It’s one thing to recognize that accountants need to reach out to the next generation of future accountants and it’s quite another to actually visit local high schools and speak to students directly. That’s what more than 120 members of the NJCPA did this past fall when they met with 3,500 students.

Presentations were given to 117 schools as part of the NJCPA’s CPA Career Awareness program, which was created to educate future generations about the accounting profession. Many of the NJCPA member volunteers routinely present at their local high school or their alma mater, and have done so for years.

As Neal Granick, CPA, tax senior at Deloitte who presented at Boonton High School, puts it, “the program is a great way to give hands-on advice to students who are just on the cusp of considering accounting. Being able to give back to society and the profession is an extremely rewarding experience, and to me it embodies what the CPA profession is all about.”

“This program gives students the opportunity to hear from professionals currently in the field, with real-life experiences working in today’s accounting landscape. That gives them unparalleled understanding of the CPA profession,” he adds. Presenters discuss everything from their own experiences in choosing accounting to coursework, study habits, what the CPA exam is all about and what kind of opportunities lie ahead in the field of accounting.

Peter Bozzo, CPA, of Peter & Roseanne Bozzo, P.C., who spoke at Central High School in Bayville, noted that “the most important benefit is to provide information to students about a career choice. It sounds like the classic cliché, but it’s really very important. I think today more than ever, students struggle with what to do with their careers.” Though unemployment remains low, the dynamics of the work force, he says, are making it difficult for students to get settled in a career. “It appears much more difficult today for younger people to

Peter Bozzo, CPA, of Peter & Roseanne Bozzo, PC, presenting at Central High School in Bayville find the right job than many years ago. To do that without debt is a herculean task.”

Presenting is important, he says, due to a misunderstanding about the CPA profession. They equate being an accountant to being a bookkeeper. Most students initially get interested in accounting because they are good at math,” he shares. But after the presentation, “students seem to understand a little better what an accountant does.

They are surprised when they hear that being a CPA mostly means being a trusted business advisor, whether you are in public or the private sector.”

And students welcome news about the longevity of accounting. “A profession that is so well established in an ever-changing workplace comes as a welcome relief for many students. It can provide financial benefit, and an NJCPA scholarship can help ease the financial burden.”

A number of the students went on to apply for an NJCPA scholarship, which offers New Jersey-based high school and college students awards based on their academic standings and essay writing.

The NJCPA Scholarship Fund awards $7,000 scholarships to college-bound New Jersey high school seniors who intend to major in accounting or obtain

Amy Perrone, CPA, senior accountant at Bowman & Company, presenting at Lenape High School in Medford a concentration in accounting. Last year, the fund awarded $410,000 in scholarships to more than 80 New Jersey-based high school and college students.

According to Pam Isenburg, member engagement coordinator at the NJCPA, “the CPAs who participate in this program are dedicated individuals who truly want the next generation to succeed.” Members looking to sign up as presenters can visit njcpa.org/volunteer or contact Pam at 973226-4494 x241 or pisenburg@njcpa.org.

Slides and presentations are provided.

NEW JERSEY CPA | MARCH/APRIL 2018

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NJCPA NEWS

New Volunteer Award to Be Presented To recognize the dedication and commitment that NJCPA members exhibit on a daily basis by helping to grow the accounting profession, educate the next generation or participate in charity events, their local communities or other worthy causes, the NJCPA will be presenting a new Volunteer Award.

Eligible nominees for the Volunteer Award include those individuals who have exemplified the very meaning of volunteering — gone above and beyond the call of duty, extended an extra hand when needed or simply made a difference in their own personal way. NJCPA volunteer work or other external commitments within the past year will be accepted but notable achievements from prior years may also be considered.

“Whether the individual acts as a volunteer leader of an NJCPA inter-

est group, chapter or committee; is an administrator of an event; or contributes his or her time and resources in support of the NJCPA in other ways, the efforts that are put forth deserve our heartfelt congratulations and recognition,” said Theresa Hinton, member engagement director, NJCPA. Nominees must be NJCPA members in good standing for at least one year.

Nominations are due by May 18 and can be submitted at njcpa.org/awards. Winners will be announced at the NJCPA’s Annual Convention & Expo on June 14 and will also be featured in the September/October issue of New Jersey CPA. WHO SHOULD APPLY yy Current NJCPA members yy Individuals themselves or organizations on behalf of individuals.

yy Members who volunteer in small ways every day or a major way once a year. yy Those who are new to volunteering but see it as their passion.

Questions about the awards programs can be directed to Pam Isenburg at pisenburg@njcpa.org or 973-226-4494.

CPE Tracker Offers Members and Firm Administrators a Secure Tool to Manage CPE Requirements Start off the 2018-20 New Jersey reporting period right by managing your CPE credits in one place. The NJCPA CPE Tracker is a tool for members to track CPE credits taken through the NJCPA as well as credits completed through other providers. As an added benefit, the NJCPA CPE Tracker report is accepted by the New Jersey State Board of Accountancy as proof of events taken with the NJCPA. If you are audited by the board, there is no need to provide individual credit letters for each NJCPA event taken.

Members can go to njcpa.org/cpetracker to: yy View a report of CPE credits earned through the NJCPA and those scheduled to be earned.

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yy Enter credits earned through other providers. yy Download an Excel file of all credits earned through the NJCPA and other providers.

If you have questions regarding your credits, contact the NJCPA education department at education@njcpa.org or 973-226-4494.

Authorized firm administrators can go to njcpa.org/cpetracker to: yy View and download the CPE credits earned by each of the staff at their firm. yy Add credits a staff person has taken through another provider. yy Watch a video demo of the CPE tracker functionality.

If you are not already set up with firm administrator privileges, complete the form at njcpa.org/firmadmin/enrollment.

Resources yy CPE Requirements: njcpa.org/education/cpe-requirements yy NJCPA CPE programs: njcpa.org/events yy State Boards of Accountancy: yy New Jersey: 973-504-6380 yy New York: 518-474-3817 yy Pennsylvania: 717-783-1404 yy Connecticut: 860-509-6179 yy Additional state boards: nasba.org/stateboards

CLASSIFIEDS

MERGERS/ACQUISITIONS

Essex County retirement minded CPA seeks CPA to assume his partnership interest and continue with remaining partner at our office location. Retiring partner will remain during transition period. Interested candidates should reply to essexcpa@ gmail.com.

Seize a merger acquisition opportunity with benefits for you. We are looking for firms ranging from $300,000 to $5,000,000 eager to combine forces as we continue to grow across Northern NJ, Westchester and the Hudson Valley region. Goldstein Lieberman & Company is ideally situated to service all types of industries. Visit www.glcpas.com; email me, Phillip Goldstein, CPA, Managing Partner, philg@glcpas.com; or call me at 800-839-5767 to have a confidential conversation.

Established CPA firm with offices in Paramus, NJ and NYC seeks to acquire accounts or practice. Has successfully completed acquisitions in the past. Contact Peter Manetta, pmanetta@mpcpas. com or 201-543-2025.

An established Central NJ CPA firm is acquiring some suitable accounting/ tax customers for its business expansion.

Please contact Jane at 908-342-7953 or email jane.cpa.2011@gmail.com.

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REAL ESTATE

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Office space for rent in CPA office at 165 Passaic Avenue, Fairfield. Furnished, 15’ x 15’ window office with views of airport. Includes use of copier, fax, high speed internet, conference room, phone and files. Call or email Michael at 973227-0086 or mkap@kapmack.com.

Union, New Jersey office space available for lease. Rent is negotiable.

Several office spaces available or entire floor if needed. Located on 420 Chestnut Street in Union, New Jersey. This building is the perfect place for professionals, located right near the town center.

Contact Megan Kian at 212-564-3199 for more information.

Office space for lease: 142 Livingston Avenue, New Brunswick. Rent includes all utilities, conference room, kitchen, gated parking, security cameras and alarm system. Cleaning once a month.

Contact Beata at 908-581-3322 or beatagall@hotmail.com.

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TO ADVERTISE: Laura Gaenzle 717.430.2351 laura.gaenzle@theygsgroup.com

CLASSIFIED ADVERTISING

Replies to ads with files numbers should be sent to: File_____, New Jersey CPA Classifieds, 425 Eagle Rock, Suite 100, Roseland, NJ 07068. To see additional classified listings or to place an ad, visit njcpa.org/classifieds.

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MEMBER STORY

Scutellaro (left) Echo Screen featuring Shaune

From Signing to an Indie Label to Signing Tax Returns Shaune Scutellaro, CPA, tax senior manager at CohnReznick LLP, did not have the most typical path to becoming a CPA, but he wouldn’t trade it either.

As the lead singer in his band, Echo Screen, from 2003 to 2007, he enjoyed performing for crowds. Though he concentrated more on sports growing up, he realized in college he had a talent for songwriting. After leaving one band and helping to form Echo Screen — named for his passion for video gaming —Shaune and his new band members eventually signed with an independent record label. Echo Screen went on to tour in New Jersey, Pennsylvania, and several tours across the country; but they had fans as widespread as Japan and Europe.

What he loved best about being in a band was the writing — particularly about life experiences and relationships. “I always wanted to craft my story with my songs,” he says, noting one of his favorite songs was “Everything After Bradford,” which described one of the band’s most surprising shows in Bradford, Pennsylvania. It’s interesting to Shaune since “everything after that show went completely wrong,” he says, adding that “people got

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MARCH/APRIL 2018 | NEW JERSEY CPA

sick and we missed shows.” The lyrics explain that “sometimes you think things are going well and all of a sudden it can go away just like that.”

Another favorite song was “This Letter Bomb” about a friend’s relationship that had gone on too long. For this song, Shaune and his bandmates traveled to Minnesota, where they spent 12 hours filming an animated video for the song.

When he finally decided to leave his band at the age of 24, it was mostly a family decision, based on his planning for the future and his wife Adrienne’s job offer in California. “It was time. As much as music is a lot of fun, there’s a lot of hard work and hard parts about it, such as the hours. The more I did it, the lifestyle was not for me,” he says.

MOVING TOWARDS THE NUMBERS Shaune didn’t immediately favor accounting over singing; it just worked out that way. As a student in college, Shaune had worked several summer intern jobs in tax and auditing while working for his father, Joseph Scutellaro, CPA, partner, CohnReznick LLP, who then worked at his own firm, Jump, Scutellaro & Co. (eventually

becoming Jump, Perry & Co.). It’s here where Shaune gained experience doing taxes in the spring and going out on audits in the summer. “When you are an accountant, you can do two or three very different jobs from each other. You are not pigeon holing yourself into one profession,” he says.

Shaune saw that he had a knack for getting to the bottom of client problems, understanding their particular industries and presenting their issues in a coherent and informative way. He always knew he liked math — and was good at it. While he was content to sing, after marrying, moving to California and looking to start a family, Shaune eventually turned to accounting to provide a quality life. A small CPA firm in Los Angeles was the start of his full-time accounting career.

But does accounting measure up to singing? For Shaune, it’s a definitive “yes.”

“People really rely on you, and if you do your job right, you are really helping people; if you pay attention and do your best for the client than you are valuable to them.” He adds, “I have the opportunity to interact with people on a personal level.

That came across to me very early; there aren’t many things that are more personal to people than their finances.”

Today, Shaune is still crafting notes, though more for clients than for hit songs. And with three kids and a specialty in tax, including start-up technology companies, he doesn’t have too much time for song writing.

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SHAUNE SCUTELLARO njcpa.org/newjerseycpa/marapr18

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Rutgers Business School Master of Accountancy in Taxation > Largest graduate tax program in New Jersey > Faculty F lt emphasize h i practicality ti lit > Designed e for career professionals > Broad array of course offerings > Flexible course schedule

Many courses offered on both the Newark and New Brunswick campuses business.rutgers.edu/taxation business.rutgers.edu/taxmaccy kathleencharmon@business.rutgers.edu (973) 353-5028

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Rutgers, The State t University of New Jersey – founded 1766

MARCH/APRIL 2018 | NEW JERSEY CPA