New Jersey CPA - Summer 2022

SUMMER 2022

TACTICS TO ATTRACT GEN Z AND GEN ALPHA ADAPT AND PROSPER: THE FUTURE FOR ACCOUNTING FIRMS BUILDING PROFICIENCY IN DATA ANALYTICS

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contents SUMMER 2022

THE MAGAZINE OF THE NEW JERSEY SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS

3 Tactics to Attract Gen Z and Gen Alpha RALPH ALBERT THOMAS, CPA (DC), CGMA Chief Executive Officer & Executive Director rthomas@njcpa.org THERESA HINTON Chief Operating Officer thinton@njcpa.org DON MEYER, CAE Chief Marketing Officer dmeyer@njcpa.org RACHAEL BELL Managing Editor rbell@njcpa.org KATHLEEN HOFFELDER Senior Content Editor khoffelder@njcpa.org DIANE ESPIRITU Senior Graphic Designer despiritu@njcpa.org THE NEW JERSEY SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS 105 EISENHOWER PARKWAY SUITE 300, ROSELAND NJ 07068 973-226-4494 | NJCPA.ORG #NJCPAMAG READ NEW JERSEY CPA ONLINE AT NJCPA.ORG/ NEWJERSEYCPA

TO ADVERTISE OR P R OV I D E S PONSORED CON T EN T IN NEW J E R S E Y C PA Visit njcpa.org/advertising or contact Eileen Proven at eproven@njcpa.org or 862-702-5640

Filling the CPA pipeline has been a difficult task for the past several years.

However, developing some tactics to connect and engage with Gen Z and now Gen Alpha — those born between 2010 to 2024 who will be the next generation to enter the workforce — could help turn things around.

6 Adapt and Prosper: The Future for Accounting Firms

Loads of in-person meetings and stacks of paper have become a thing of the past due to the pandemic. But it only hastened what was already afoot — digitally progressive accounting firms armed with apps and other technologies to improve client relations.

8 Building Proficiency in Data Analytics

Three types of data analytics are particularly well-suited for CPAs: financial analytics, operational analytics and audit data analytics. By tracking and applying these analytics, CPAs can help bring value to the table.

2 CLOSE UP

Getting to Know Kathy Powers 10 ACCOUNTING, AUDITING & ATTEST

Revenue Recognition Changes in the Construction Industry: More Than Just Terminology 11 BECOMING A CPA

5 Tips and Tools for Passing the CPA Exam 12 BUSINESS MANAGEMENT

The Trusted Strategic Accountant Free Help for Businesses During the Pandemic and Beyond

14 FINANCIAL PLANNING SERVICES

Can Financial Planning Services Double a CPA’s Income?

15 FIRM MANAGEMENT SPONSORED CONTENT

How CPA Firms Can Navigate Remote Staffing Challenges 16 PROFESSIONAL DEVELOPMENT

5 Common-Sense Steps to Successful Networking 17 RISK & COMPLIANCE

What CPAs Should Know About Active Directory KPIs for Fraud Prevention and Detection 20 TAX

IRS Ruling Provides Insight into Section 1202 Qualified Small Business Stock

23 NJCPA NEWS

y 2022/23 NJCPA Leaders y The CPA Pipeline — Adressing the Decline y Convention Exhibitors Help CPAs Facilitate Change y NJCPA Awards Student Scholarships y In Memoriam y Members Give Free Advice for 2022 Tax Season 31 CLASSIFIEDS 32 MEMBER PROFILE

Matthew Rambaran, CPA, MBA

CLOSE UP

Getting to Know Kathy Powers

BY KATHLEEN HOFFELDER, NJCPA SENIOR CONTENT EDITOR

improve operations are big parts of her job.

“I have the ability to impact those individuals that we serve. I get to do so many different things,” she adds.

Having worked with Matheny as a client previously as well as other nonprofits, Kathy was able to easily understand the organization’s many lines of business including its adult and children’s hospital, educational center and adult resident community; hire the right resources; and fit in with its unique culture. “I had to slow down. I was used to going fast, fast, fast, but you have to slow down, and you have to listen,” she explains.

The New Jersey Society of CPAs welcomes Kathleen F. Powers, CPA, chief financial officer of Matheny Medical and Educational Center of Peapack, as its 2022/23 president beginning June 1, replacing outgoing president Harry P. Wills, III, CPA, MBA, a partner with Voorhees-based Bowman & Company LLP. Knowing how to not only listen, but listen well, helped propel Kathy to her current positions with both the NJCPA and Matheny. Prior to becoming NJCPA president, Kathy was a member of the Board of Trustees for the past three years and participated in several groups including the Governmental Accounting & Auditing Interest Group, Nonprofit Interest Group, Finance Committee and Business & Industry Professionals Interest Group.

Before joining Matheny, she worked more than 15 years in public accounting, most recently at ParenteBeard (now Baker Tilly).

“I spent all but the last seven years in public accounting. I think that truly prepared me for the job I have now. As a CPA, you are managing people, but also managing expectations. You are managing client expectations, those above you and you are also managing your staff,” she explains.

“You are learning to work with people with different personalities and points of view.”

Thinking strategically and working to

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LOOKING FORWARD As NJCPA president, Kathy will look to espouse the advantages of working in corporate and nonprofit settings to the next generation of CPAs since they may not realize the many benefits of those kind of jobs and what’s needed to get there.

According to Kathy, being CFO is a very hands-on, strategic role, saying, “I really had to roll up my sleeves and get into the weeds.”

Always an advocate of women’s equity, Kathy will also focus on enhancing women’s leadership in the accounting profession. Currently the manager of about 40 individuals on staff, she explains that the COVID-19 pandemic did offer flexibility in terms of schedules for many

individuals, but particularly women, who are managing households, adding, “which is all we ever wanted.”

Mentoring has helped women, she notes, but to truly move the needle forward on diversity, equity and inclusion there needs to be more of those willing to “go to bat” for them and “invite them to the table,” not just advise from afar. “It’s important for women to see themselves in other people and important to pull each other up,” she adds. “Women have made great strides in getting to the C-suite level but it’s still too few.”

LEARNING FROM THE PAST Positive career influences came at an early age from Kathy's parents as well as her grandfather, who earned his CPA license in his 50s. Her mother, who worked in the banking industry while she was growing up, encouraged her and her three siblings to be “independent and strong.” Already knowing the benefits of being a CPA, she acknowledged, “I always wanted to be a CPA; it was never my immediate goal to be a CFO, but I always wanted to be a CPA.” Married, with two daughters in high school and college, respectively, Kathy is still hopeful about passing that CPA tradition on to at least one more family member.

Learn more about Kathy at njcpa.org/ about/board.

New Jersey CPA (ISSN 1534-6692) is published quarterly by the New Jersey Society of Certified Public Accountants, 105 Eisenhower Parkway, Suite 300, Roseland, NJ 07068. Issue No. 91 Copyright © 2022 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 the subscription price from dues.

Periodicals postage paid at Roseland, NJ, and at additional mailing office.

POSTMASTER: Send address changes to New Jersey CPA, 105 Eisenhower Parkway, Suite 300, Roseland, NJ 07068-1640.

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.

TACTICS TO ATTRACT GEN Z AND GEN ALPHA TO ACCOUNTING

By KATHLEEN HOFFELDER

NJCPA SENIOR CONTENT EDITOR

With declining accounting program enrollments and a fall-off in the number of new CPAs, accounting professionals and academia are realizing the need to attack the CPA pipeline problem head on. That means, like warriors, they need strategies and plans. Here are some tactics to reach the latest generation in the workforce — Gen Z, born between 1996 and 2010 — and the next, Gen Alpha, born between 2010 and 2024.

START EARLY Introducing the accounting profession as a positive career choice at an early age can help. While, historically, high school or college professors informing students about the accounting field have made significant breakthroughs, some are realizing extra efforts need to be made to reach and connect with these new generations.

Albert J. Campo, CPA, MBA, president of AJC Accounting & Consulting Services, LLC, supports early education on becoming a CPA. “Like the NJCPA, all state societies should be engaging students starting at the high school level, educating them about what the accounting profession is and the multitude of options available to them with an accounting degree,” he said. The NJCPA’s Career Awareness program at the high school level has helped many students not only go into the accounting field but apply for NJCPA scholarships as well.

An introduction to the accounting profession at an even earlier stage, such as middle school or elementary school, could also be what’s needed to pique the interest of these generations. CPAs who are parents of students in these schools could take the initiative on career days and enlighten

students about the field of accounting.

Learning about a CPA, alongside a fireman or policeman in elementary school, for example, could also help. Teaching resources, such as Applied Educational Systems’ Middle School Career Readiness projects (aeseducation.com/blog/careerexploration-projects-middle-school), can lessen the burden on teachers to describe what accounting is all about and help explain a typical day in the life of an accountant.

Getting the attention of Gen Z at a networking event is also unmatched for both students and the accounting firm or organization looking to hire. Prior to the pandemic, networking was shown to be one of the most successful ways to land a job or make a connection for a future move. Dr. Barry R. Palatnik, Ed.D, MBA, CPA, associate professor of accounting at Stockton University, knows firsthand about the importance of networking. Stockton teamed up with the NJCPA Atlantic/Cape May Chapter in February to host a Zoom call and one-on-one Zoom breakout sessions with students and accounting professionals. The students had such a great time that they asked for more events like this.

COMMENTATORS (in order of appearance)

ALBERT J. CAMPO, CPA, MBA

DR. BARRY R. PALATNIK, Ed.D., MBA, CPA

President AJC Accounting & Consulting Services

Associate Professor of Accounting Stockton University

JERRY MAGINNIS, CPA Executive in Residence Rowan University and author

JESSICA E. McCLAIN, CPA, CISA, PMP, CITP, CGFM CFO Girl Scouts of Nation’s Capital

KRISTINA KOSTOVSKI, CPA Senior Accountant Traphagen CPAs & Wealth Advisors

NEW JERSEY CPA | SUMMER 2022

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UNDERSTAND DIFFERENCES With five generations in the workforce, accounting professionals already have a host of challenges to deal with on a day-to-day basis. Technologically savvy Gen Z professionals may not be able to communicate as well as their Gen X (born 1965 to 1981) coworkers and managers, while the Baby Boomer (born 1946 to 1964) directors and department/firm leaders may not readily embrace change.

Every generation has its own ideas about the rewards and any potential frustrations in the accounting profession. As Campo asked, “How can a job that’s viewed as stable and in demand be suffering talent shortages?” He explained, “Part of the reason for the supply issue is that many older practitioners have moved up their retirement exit strategies and others have just left the profession due to burnout from the past two years.”

Both Gen Z and Gen Alpha overlap somewhat in terms of technological aptitude and mobility, but Gen Alphas do have traits of their own. As a McCrindle blog (mccrindle.com.au/insights/blog/ gen-alpha-defined) explained, Gen Alpha individuals are more global, digital, social, mobile and visual compared to the previous ones. Gen Z has also been defined as favoring more flexibility and wanting career growth opportunities.

With these traits, it is likely to mean that these individuals put more emphasis on their time away from the office like Gen Zers and may not readily favor long work

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weeks and anything called a “busy season.”

“The individuals in those generations have a different approach than even millennials.

They work to live whereas most of the older population in the accounting industry lives to work. That lifestyle needs to change otherwise the talent shortage issue will affect the accounting industry for many years to come,” said Campo.

Gens Z and Alpha are also very “values driven,” reminded Jerry Maginnis, CPA, an executive in residence at Rowan University and author of Advice for a Successful Career in the Accounting Profession: How to Make Your Assets Greatly Exceed Your Liabilities (njcpa.org/article/2021/12/02/ new-book-offers-advice-for-starting-andadvancing-in-accounting). “The profession has a great story to tell here, given the important role it plays in the capital markets system and broader economy, but it will need to step up its game in making young people aware of the sense of purpose that derives from an accounting career.”

Palatnik acknowledges the time to connect with these generations is now.

“As Gen Zs enter the workforce, the accounting profession must be proactive in understanding the needs of this generation and future generations. More importantly, if we are losing young recruits, we must find out why they are leaving firms or the profession. The more we know about Gen Z, the better we will be prepared to support the CPA pipeline.” He added, “accounting firms must make sure they have strategies in place to accommodate Gen Z with offices

and have visual displays of honesty and trust with their employees and clients.”

Gens Z and Alpha are also more diverse than other generations. According to Maginnis, such diversity makes it “imperative that the profession does a better job than it has historically in attracting underrepresented minorities.” This, he added, will likely require a change to traditional recruiting approaches. “As the cost of higher education continues to increase, the profession will need to have a stronger presence on community college campuses, particularly if it wants to be successful in accessing this future talent pool.” Getting the message out about the profession to community colleges along with four-year universities has been a priority for the NJCPA in recent years.

And Gen Zers are not just looking for initiatives towards diversity and inclusion — they want to see it embedded in an organization’s culture, said Jessica E. McClain, CPA, CISA, PMP, CITP, CGFM, CFO of the Girl Scouts of Nation’s Capital.

“This generation expects organizations to embrace diversity and inclusion. They expect to see leadership accountability and intentional, actionable efforts regarding inclusive work environments. Understand they are skeptical of diversity and inclusion marketing ploys and window dressing.”

RESHAPE THE IMAGE To say the accounting profession has an image problem is a bit of an understatement. As a 2020 CPA Journal article (cpajournal.com/2020/09/30/accountingeducation-at-a-crossroads) points out, “Students’ perceptions about the value of a traditional accounting education, and the value of the credential in the marketplace, appear to be in decline.” While the cost to obtain a CPA license and the time involved to fulfill the 150-hour credit requirement weigh on potential candidates for sure, the image problem can and should be able to be addressed. “Old stereotypes run deep,” explains Campo. “To most, CPAs just do taxes, and nothing can be further from the truth. CPAs fill a multitude of roles at both public accounting firms and in private industry. You aren’t just stuck doing taxes.”

To entice these new generations, McClain noted that they need to be

shown how the accounting profession has changed, which is particularly important with Gen Zers who are looking to do meaningful and impactful work. “The work performed by accountants today has evolved. It is less transactional, manual and focused on the past. Today’s accountant focuses on more than just numbers. Today we must be strategic and anticipatory,” she said.

And what’s the best message to tell them? “We use numbers to tell a story, advise our clients and look into the future.

We drive business performance and create sustainable value. As accountants, our work is interesting and challenging and will appeal to Generation Z,” said McClain.

Similarly, Kristina Kostovski, CPA, senior accountant at Traphagen CPAs & Wealth Advisors, believes employers need to adjust their thinking on what these generations want in a job. “As someone in the compliance realm of accounting, the long hours can be overwhelming if the environment does not compensate for the

tough hours,” she said. “Having a supportive, vibrant workplace goes beyond happy hours and team outings. Professional development sessions, mentorship programs and access to advanced education and additional credentials will help you attract the kind of employee that values themselves, their careers and, by extension, your firm.”

Yet, making an accounting job fun and flexible does have its appeal. “To attract the next generation of CPAs, it is important to have a clear understanding of the benefits of the job outside of busy season. Summer Fridays and other fun workplace programs may help someone see the fruits of their labor,” added Kostovski. “Employee moral would increase with a work environment that allows for employees to be flexible with their hours and their remote/in-office preference. Further, dress-for-your-day policies bring the accounting profession into a more modern environment that attracts talent. After all, saving a half hour ironing your business suit can help employee productivity!”

Palatnik also supports flexible work arrangements for these individuals. “Two things Gen Z is familiar with are ‘working remotely’ and ‘fake news.’ However, Gen Z, may have the most experience in working remotely from their time in college,” he added.

One thing is certain: Failing to identify the need to reach and connect with these new generations will have consequences for the profession. As Todd M. Shapiro, president and CEO of the Illinois CPA Society, explains in a 2021 CPA Pipeline Report (icpas.org/information/ professional-issues/decoding-the-decline), “We steadfastly believe the CPA credential and the CPA profession are in a race for relevance, and the time to act is now.”

READ MORE CPA PIPELINE KNOWLEDGE HUB

njcpa.org/pipeline

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NEW JERSEY CPA | SUMMER 2022

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ADAPT AND PROSPER: THE FUTURE FOR ACCOUNTING FIRMS

By CHRISTOPHER R. CICALESE, CPA, MSTFP

ALLOY SILVERSTEIN ACCOUNTANTS AND ADVISORS

If the pandemic has taught the accounting profession anything, it is that traditional accounting firms full of paper, office hours and in-person meetings are officially on the outs and firms must start to adapt to the new era.

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The days of ledger paper and in-person meetings are scarcer than ever, and tech stacks and remote work policies are now the focus for many firms. To compound the issue, the profession has started to see a talent shortage that is requiring firms to figure out how to increase capacity to maintain sanity during busy time and leverage their teams appropriately.

CLIENT EXPERIENCE At the beginning of the pandemic, virtually every professional was forced home. For tax professionals, it came at the worst possible time with the April 15 deadline looming. Despite the various extensions, firms had to pivot, if they had not already, to adopt an electronic delivery system.

Client portal systems and safe file-sharing services that focus specifically on the electronic delivery of tax returns became vitally important.

But firms shouldn’t stop there. Consumers are using apps to conduct many facets of business and commerce, and human-tohuman interaction is less prevalent. Even with businesses returning to more “normal” operations, customers will still want a choice in how they interact. And this includes clients’ interactions with their accounting firms.

In addition to improving the customer experience with apps, overall accounting has changed for the better. Clients who were stuck on outdated software that made seamless collaboration next to impossible were forced to make a change, or at least be more open-minded about change, so they could run their businesses remotely.

The increasing prevalence of cloud-based software has opened the possibility

for any accounting firm to adopt more of an advisory approach to their services and provide more value by automating lower-end services.

INTERNAL CHANGES Any accountant who has had the opportunity to follow the #TaxTwitter community on social media will tell you that traditional firms are under fire. Various “members” have been promoting their firms’ low-hour busy season work week, unlimited supply of talent and absence of time tracking. To some, this all seems too good to be true. But potentially, to some extent, this is the way of the future.

Many firms perform a large majority of their services in the first 25 percent of the year, and this often requires a significant overtime commitment to make sure that the workload gets completed timely in such a compacted period. Successful firms will strive for creative ways to increase capacity and decrease burnout. Hiring per-diem help during crunch time is a solution many firms have used for years. This concept has expanded recently with more professional service firms offering outsourced businessto-business services.

For accounting firms, outsourcing can take various forms. One is sending tax returns to an outsourcing provider, such as CCH, and another could be having a “team member” from anywhere helping the team as a temporary, remote employee. If there was a bottomless talent pool, there would not be an issue; however, it is a struggle for teams to find talent. By adopting remote desktops, firms can add employees from other states. This opens the talent pool, but also requires a firm to be able to work, communicate and train remotely.

The unicorn for many accountants is the day that they no longer need to keep time sheets. In an age when firms utilize realization statistics and KPIs to help evaluate staff members, it may be hard to eliminate the time sheet. But firms with no timesheets still have time as a component of the conversation. The timesheet is more of an internal measurement strictly to ensure that jobs are not a bottomless pit of time. Firms that do not keep timesheets can focus on making sure their staff have short-term, hard deadlines that they are required to meet to promote quick turnaround. This concept is still evolving, and traditional firms will likely not eliminate timekeeping altogether, but it is a step in the direction of the future. When the larger firms figure out how to do this and successfully evaluate team members, other firms will likely follow.

The pandemic has proved that working remotely can be successful. While lessexperienced staff may need to be in the office to develop their skills and learn from

management, it is possible to work remotely for extended periods of time and still get the work done. This gives employees the flexibility to not only choose their own hours, but also to choose where they work. Logging in from a vacation home or Air B&B could be just as productive as logging in from home.

NEXT STEPS While not every firm may be ready to make the leap to future-proof themselves all at once, changes can be made one step at a time. This could be as simple as testing software by putting a small batch of work through it or having a few remote-only days during the slower months to help with work-life balance. At the end of the day, the profession is changing, and those who do not adapt will slowly fade away.

LEARN MORE June 14-17, Atlantic City NJCPA CONVENTION & EXPO — THE WAY FORWARD: TRANSFORM. INNOVATE. GROW.

July 20, Aug. 10 or Aug. 18, Live Webcast or On Demand WORKING REMOTELY: BEST PRACTICE, CHALLENGES AND OPPORTUNITIES

Sept. 21, Live Webcast ADVISORY SERVICES CONFERENCE

njcpa.org/events

Christopher R. Cicalese, CPA, MSTFP, is an associate partner at Alloy Silverstein Accountants and Advisors. He is a member of the NJCPA and can be reached at ccicalese@alloysilverstein.com.

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BUILDING PROFICIENCY IN DATA ANALYTICS

By MARC D. MINTZ, CPA, CITP, CGMA

MARC MINTZ & ASSOCIATES, LLC

Anyone with a degree or extensive experience in statistics knows that data analytics has been around for a long time. So, what is data analytics, why has it become so prevalent and how can CPAs leverage it?

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Briefly stated, data analytics is the process of manipulating raw data into actionable information for better decision making.

There are several factors that have recently accelerated this science across broad swaths of businesses. These include real-time access to petabytes (1 quadrillion bytes) of data, software tools that provide data scientists swift and diverse analysis of data, and advances in artificial intelligence that allow systems to evolve with minimal human intervention. While there are countless areas where data analytics can be applied, let’s review three that are particularly well suited to CPAs. FINANCIAL ANALYTICS Gone are the days when businesses could wait for annual, quarterly or even monthly historical financial statements to effectively implement tactical decisions to maximize profitability and cash flow. Financial analytics allows interested stakeholders to view and manipulate near real-time data to see how actual results measure against budgeted amounts. Budgets can then be revised in a timelier manner to reflect changing conditions.

Financial analytics also enables what-if scenario planning that can model anticipated results based on changes in selected variables including inflation, interest rates and specific industry economic growth patterns. Dashboards allow visualization of data that can trigger alerts when metrics are not being met. Advanced statistical tools and analysis allow management to move beyond decision making based on conjecture. Predictive analytics can be used to track and estimate cash flow, forecast sales activity and evaluate financial trends on both the balance sheet and income statement.

OPERATIONAL ANALYTICS Operational analytics moves beyond high-level financial statements and drills into the granular details that drive business performance. Tracking and then applying incremental changes into business processes dissects workflow to its most basic elements. Although operational analytics looks different depending on the industry where it is being applied, the benefits are similar. Increased productivity, better utilization of resources, improved customer experiences and faster decision making are all byproducts of successful operational analytical projects.

In a manufacturing environment, data is gathered from disparate devices (the internet of things), enterprise resource planning (ERP) systems, time-tracking tools and outside benchmarking resources.

This information is validated, aggregated and analyzed to improve labor productivity, production yields, machine down-times, supplier performance, product quality and a host of additional metrics. This becomes an iterative process that continuously measures, suggests adjustments and improves each step in the manufacturing process.

AUDIT DATA ANALYTICS Audit data analytics introduces software tools and techniques that perform analysis of complete datasets thereby eliminating reliance on small, random samples. Use of these systems eliminates repetitive tasks and tedious data entry, freeing auditors’ time for more complex testing to discover data anomalies and perform more extensive risk analysis. Audit data analytics can be introduced early in the audit process to allow discovery of potential problems while datasets are current and evolving.

Professional judgement and experience are never replaced by these digital tools.

Assessing the quality of the raw data under audit, then extracting, transforming and loading the cleansed data into the analytical tools being used requires seasoned professionals with a high degree of expertise and acumen.

The following websites highlight the features and capabilities of audit data analytics software: y CaseWare IDEA Audit Software and Data Analysis Software — idea.caseware.com/products/idea y Wolters Kluwer TeamMate Analytics for Audit — wolterskluwer.com/en/ solutions/teammate/teammate-analytics HOW TO BECOME A DATA SCIENTIST There are many different avenues that one can pursue within data analytics with varying levels of hands-on participation and required training. An excellent option for an intense learning experience, that also offers 61 CPE credits, is the AICPA’s Data Analytics Certificate Bundle. The complete course work includes five separate certificate programs presented via online lectures and also include hands-on learning labs which provide intense practical application of the concepts and software tools presented.

The introductory-level Data Analytics Core Concepts Certificate is the starting point for this program. With information technology as the field of study, participants begin to understand what data analytics is and how it can be applied in a business environment. For those simply seeking a high-level overview of how data analytics can be used under different scenarios, this might be the only course required.

All of the remaining courses are regarded as intermediate level. The Application of Data Analytics Essential Certificate and the Forecasting and Predictive Analytics Certificate each provide a heavy dose of statistics for people interested in moving beyond the roles of champion and business analyst. These programs lay the foundation for professionals seeking to become data engineers and data scientists specializing in extracting, transforming and loading (ETL) data and then performing all of the necessary manipulation to provide end users with actionable insights. These two programs offer significant hands-on activities with a wide assortment of software tools and programming languages that go beyond any single vendor’s prescribed solution.

Additional certificates in Data Modeling and Data Visualization fall under the fields of study in both specialized knowledge and information technology. These two programs offer CPAs and finance professionals the most useful tools for manipulating and presenting data to executives, managers and other interested stakeholders. Work product from these programs provides information and insights to formulate, implement and fine tune operational strategies.

NJCPA members can save 25 percent on each of the AICPA data analytics certificates with code DATAA25 (offer expires Aug. 31, 2022). Visit njcpa.org/ certificates for more information and to enroll.

Evolution in data storage, broadband communications, mobile technology, artificial intelligence and database capabilities are continuously changing the standard operating processes in almost every aspect of business practice. Decision making and management styles that continue to rely on guesstimates, gutfeel and seat-of-thepants prognostication are destined to go the way of the dodo bird. Data analytics has emerged as a reasoned, scientific method that will raise the level of business management in countless situations. Like any business practice, care must be taken to understand and work around potential shortcomings that arrive with any business

science, including data analytics. That said, reliance on new tools, techniques and analysis will continue to proliferate throughout accounting, business and every aspect of our daily lives.

Marc D. Mintz, CPA, CITP, CGMA, is the managing member of Marc Mintz & Associates, LLC. He is a former NJCPA Trustee and a past president of the Passaic County Chapter. Marc can be reached at marc@marcmintz.com.

READ MORE DATA ANALYTICS KNOWLEDGE HUB

njcpa.org/hub/dataanalytics

LEARN MORE June 10, June 27, July 12 and additional dates, Live Webcast DRIVING PERFORMANCE WITH METRICS

June 10, June 30, July 13 and additional dates, Live Webcast BUSINESS INTELLIGENCE AND DATA ANALYTICS

June 13 or Aug. 16, Live Webcast DATA ANALYTICS: PRACTICAL INSIGHTS FOR TODAY’S ACCOUNTANT

June 14 or Sept. 8, Live Webcast DATA ANALYTICS TOOLKIT — TOOLS AND APPLICATIONS

njcpa.org/events

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ACCOUNTING, AUDITING & ATTEST

Revenue Recognition Changes in the Construction Industry: More Than Just Terminology

BY MATTHEW J. BOLAND, CPA, CCIFP, McCARTHY & COMPANY, PC

When ASC 606 took effect in January 2018, it redefined many accounting standards. Within the construction industry, there were key changes to revenue recognition standards.

Since the changes were implemented, there has been widespread confusion and inconsistency regarding revenue recognition for construction contracts. The confusion is caused by misunderstanding the ASC 606 changes, where contract revenue recognition was changed from “overbilling” and “underbilling” to “contract assets” and “contract liabilities.” While some may use the two terms interchangeably, it is not enough to swap contract assets/contract liabilities for overbilling/underbilling. The post-ASC 606 results for the same financials should be different since the formulas are different.

ASC 606 CHANGES TO CONTRACT REVENUE RECOGNITION The old calculation for underbilling/ overbilling was (Total Billings - Earned Revenue). It was labeled overbilling when the result was positive and underbilling when negative.

However, retainage receivable per job must be added to underbillings (if that job is in an underbilled position) or netted against overbillings (if that job is in an overbilled position) to determine if each job is in a contract asset or contract liability position.

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MISCONCEPTION OF RISK Although the two have entirely different calculation formulas, there are many examples where the only change was to the label in the report. This misrepresents the risk presented in the financial documents.

Users of the financial statements often view underbillings as a higher risk than overbillings because underbillings may be indicative of inflated estimated profit margins and eventual job fade. However, as the previous calculation shows, a job may be overbilled but in a contract asset position if the retainage receivable on the job is more than the overbilling. Therefore, if the users believe that contract assets are the same as underbillings, they may believe that a job is underbilled when it is actually overbilled. As a result, they may believe a business is operating under high-risk estimates, which may not be the case.

MOVING FORWARD Consistent processes and clear, accurate reports are crucial to the accounting profession. Auditors need to use the correct terminology AND calculation to accurately present data in their reports.

There are several steps firms can take to catch errors in their current processes and prevent more in the future. y A firm should start by assessing their team’s current level of understanding regarding ASC 606 and calculating contract assets and contract liabilities. y If there is a misunderstanding, the firm should implement training to educate the entire team on the latest processes and accurately execute calculations for these audits. y Once internal misunderstandings have been addressed, the firm should also review any financial documents for clients to ensure that they are using the correct terminology and calculation standard for contract assets and contract liabilities.

y If any issues are found, the firm should formulate a plan for communicating with clients on this issue.

This action plan will ensure a quality deliverable, which gives clients and the entity receiving the financial information reliable information to make informed financial decisions.

Matthew J. Boland, CPA, CCIFP, is the director of accounting and assurance at McCarthy & Company, PC. He can be reached at matthew. boland@mccarthy.cpa.

LEARN MORE June 9 or Aug. 10, Live Webcast or On Demand CONSTRUCTION CONTRACTORS: ACCOUNTING AND FINANCIAL REPORTING ISSUES

June 10 or July 25, Live Webcast or On Demand REVENUE RECOGNITION FOR LONG-TERM CONSTRUCTION AND SIMILAR CONTRACTS

Aug. 29, Live Webcast CONSTRUCTION CONTRACTORS: CRITICAL ACCOUNTING, AUDITING AND TAX ISSUES

njcpa.org/events

LISTEN MORE ISSUESWATCH PODCAST: A&A UPDATE WITH BRAD MUNIZ New episodes every other Tuesday

njcpa.org/podcast

READ MORE ACCOUNTING & AUDITING KNOWLEDGE HUB

njcpa.org/hub/accounting

BECOMING A CPA

5 Tips and Tools for Passing the CPA Exam

BY THOMAS J. KLEINHANS, CPA, CENTRI BUSINESS CONSULTING LLC

A lot of asset blood, liability sweat and equity tears are shed during every professional’s CPA Exam journey. No journey is the same, but every person is trying to reach the same destination: Pass all four sections of the Exam and become a certified public accountant. There are many methods to the madness, so here are five tips to keep you progressing forward: 1. Do your homework before you buy the study course. It is vitally important that you choose a study review course that is well suited to your own personal study methods. If you rely more on memorization you may find that going through 300 multiple choice questions and highlighting a review book is easy with a less-expensive course like Gleim.

If you are more of a visual learner, you may prefer Roger CPA because of their great teaching videos that can help you grasp things like the dreadful weighted capital expenditures calculation. Then there’s Becker that provides access to unlimited resources to back their reputable review course. Take advantage of the free trials from each provider to find the right fit for you.

2. Study time means study time. In today’s technologically advanced world, distractions are more prominent than ever. A one-hour study session can turn into eight minutes of Instagram, 10 minutes of picking a playlist, 12 minutes of trying to create a non-fungible token and there goes half of your time along with half of your score! Make it a priority to find a setting that provides privacy and as few distractions as possible. Also, determine whether you are more productive using shorter study sprints or longer marathon sessions.

3. Know your strong suits before deciding your exam order. Are you an auditor or a tax accountant? Did you excel in intermediate accounting or IT and microeconomics? Do you like

hearing bad news or good news first?

These are all questions you should ask yourself before selecting your first exam section. The Financial Accounting and Reporting (FAR) section has the most study material, so taking and passing FAR first gives you the advantage of not having that study time count against your 18-month window. However, if you want a confidence boost, maybe you want to take the Auditing and Attestation (AUD) section first and then dive into FAR. If you’re a tax accountant and have scheduled your first exam in January, you may want to take the Regulation (REG) section so the study material aligns with your work material. These are all personalized questions you need to ask yourself in the planning phase of the CPA Exam.

4. Procrastination is a synonym for devastation. You’re six weeks away from taking the FAR exam, and your review book is starting to collect dust. If you continue to push off studying until three weeks before an exam, it is highly unlikely you will succeed in passing.

Study calendars are a great tool to keep you on track, especially if your review course offers to implement the calendar.

Turn on notifications so you get a text about when the next chapter is due.

Also, always allow yourself a week prior to the Exam to review and take the simulated test.

capable of helping you overcome any obstacle standing in your way.

There are plenty of days you will wake up and ask yourself, “Why am I doing this?” Make sure you’re taking this Exam for the right reasons, and you’ll have the coveted three letters at the end of your name before you know it!

Thomas J. Kleinhans, CPA, is a manager at Centri Business Consulting LLP. He is a member of the NJCPA Emerging Leaders Interest Group and can be reached at thomasjosephkleinhans@gmail.com

READ MORE CPA EXAM GUIDANCE AND RESOURCES

njcpa.org/cpaexam

DO MORE SAVE ON CPA EXAM PREP COURSES

njcpa.org/examprepcourses

5. Tell your family/friends/co-workers you are taking the Exam. Studying for the CPA Exam is similar to working a second job, which means less time for family, fewer happy hours with your friends and practically no time to hang out with co-workers outside of work.

Letting the people around you know about the Exam helps them understand why they will not have your undivided attention, which, in return, should help you stay focused. Also, if you run into a bump in the road, these are the people

NEW JERSEY CPA | SUMMER 2022

11

BUSINESS MANAGEMENT

The Trusted Strategic Accountant

BY DR. CHRISTOPHER W. YOUNG, MBA, MAFF, CVA, RUTGERS UNIVERSITY AND RED MAPLE GROUP

As the most trusted advisor, CPAs hold the ear of business owners. But while they continue to have this envious position, the advice they provide must move well past statutory and regulatory services and into strategic advisory services. Dr. Michael Porter, a long-time strategist and professor at Harvard Business School, provides a framework to help them do so.

DIFFERENTIATED VERSUS LOW-COST Business owners often struggle to effectively answer the question, “How do you compete against your competitors?” Dr. Porter suggests that companies can compete successfully by providing a premium, differentiated product or a homogenous low-cost offering.

When it comes to differentiation, CPAs can help business owners understand if the products and services they offer are much different from other competitors.

Companies that compete by offering differentiated products or services should consider themselves premium providers and command a higher price than other competitors. Alternatively, some business owners provide similar, if not exact, replicas of all other products and services in the same market. This business owner is usually a low-cost provider and will compete on price and quality.

Consider this example: A low-cost provider of homogenous luggage, backpacks and shoulder bags is considering expanding its product line to include premier fashion differentiated handbags. Presently, the lowcost producer offers almost no customer service except for a direct phone number for the sales representative and provides virtually no guarantee for the performance

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of their bags. However, with this new endeavor and now knowing that the clientele will be paying a premium, the low-cost producer is considering offering a warranty and a customer service hotline for bags requiring some service.

With an understanding of the differences between differentiated producers and low-cost producers, the CPA has a straightforward, two-variable framework to begin current and future strategic conversations. In the case at hand, the accountant can now ask the following questions: y Does the business have the financial and human resources needed to staff a client services department and the additional sales representatives to call on the clients interested in the premium bags? y How will this new addition of premium handbags influence the company’s brand? y Will customers purchase premium products from a company that historically provided low-cost products? y What are the profit margins of the premium handbags, and how will they affect the overall profits?

There will be a stream of questions that the strategic CPA can develop after framing the business in a manner reflective of differentiated offerings or low cost. However, one thing that is important to take from Porter is his view that most companies are not well suited and not very successful at offering both differentiated and low-cost offerings, mainly because they each have different requirements and competencies.

For example, consider a company such as USAA, which offers financial service products to military families. USAA is a differentiated service and charges prices higher than most of its competitors in the financial services marketplace. Everything that USAA does supports this premium service, including a customer service

department that helps quickly solve client issues. USAA has continued to perform well and is coming up on its 100th anniversary.

Similarly, low-cost airline Southwest provides almost no customization, no premier services and their flights usually are homogenous regardless of the customer.

Southwest focuses all of its resources on logistics, getting flights to take off and land on time, for a price lower than all other competitors. Southwest does not try to do multiple things, such as offering premium and low-cost services simultaneously. Both USAA and Southwest Airlines continue to develop a competitive strategy entrenching themselves in offering either premier or lower-cost services, ensuring that they do not muddy the plan by attempting to be all things to all customers.

By using this tool regularly, CPAs can move from trusted advisor to strategic trusted advisor.

Dr. Christopher Young, MBA, MAFF, CVA, is associate professor of Professional Practice at Rutgers University and the founder of the Red Maple Group, a full-service economic firm. He can be reached at chris@theredmaplegroup.

LEARN MORE Sept. 26, Live Webcast DRIVING CORPORATE PERFORMANCE: THE CFO’S ROLE IN DEVELOPING COMPETITIVE ADVANTAGE

Oct. 28, Live Webcast CFO SERIES — CREATING COMPETITIVE ADVANTAGE

On Demand DRIVE YOUR ORGANIZATION’S STRATEGY: DECIDE WHERE TO COMPETE

njcpa.org/events

READ MORE BUSINESS MANAGEMENT KNOWLEDGE HUB

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BUSINESS MANAGEMENT

Free Help for Businesses During the Pandemic and Beyond

BY MELANIE L. WILLOUGHBY, NEW JERSEY BUSINESS ACTION CENTER

Who knows better than CPAs about businesses’ needs to grow, find financing, deal with a government snafu and handle a tax audit? The accountant is often the first to hear when a business is looking for a location, seeking to expand or ready to hire employees. They are also the first to get questions about state laws, regulations, permitting, licenses and more.

The New Jersey Business Action Center (NJBAC) can be the resource that CPAs turn to for answers to these questions.

The NJBAC, a state office within the New Jersey Department of State, is ready to answer these questions in minutes or work with the CPA and business owner one-onone to resolve more complicated issues.

The NJBAC offers help with the basics of starting a business, finding technical assistance, creating a business plan, selecting a form of incorporation and choosing a trade name. As the idea progresses, the NJBAC can help find lenders and state and federal lending or grant programs aimed at helping innovative companies get off the ground.

The Business Helpline, 1-800-JERSEY-7, can provide answers to CPAs or business owners directly. The hotline receives more than 25,000 calls a year and is answered by

experienced people who work to get answers to questions quickly and efficiently.

The NJBAC also staffs a live chat on the state business website, business.nj.gov, where questions can be submitted directly to business experts.

STARTING UP OR EXPANDING Business Navigator is a new feature available on business.nj.gov that provides new businesses with a customized road map for starting their business and offers a dashboard of available resources for existing businesses. The Navigator is constantly evolving as new features and updated information are added. This is a valuable resource for businesses starting up.

The NJBAC can also help businesses find new locations, expand, construct their buildings and hire skilled workers by coordinating with state agencies such as the Department of Transportation, Department of Environmental Protection, Department of Community Affairs and Division of Consumer Affairs to develop solutions, set up meetings regarding permitting, licensing and regulatory challenges to help streamline the process, and more.

STAYING COMPLIANT The NJBAC is also focused on helping businesses understand the new state laws that apply to them, such as family leave policies, paid sick leave and independent contractor regulations and how to stay in compliance with these regulations. For instance, the NJBAC was given responsibility for educating businesses about the new ban on plastic bags and polystyrene foam food service products (business.nj.gov/bags/plastic-ban-law).

Additional resources include the following: y Starting a Business Checklist (nj.gov/ state/bac/assets/pdf/nj-new-businesschecklist.pdf) y Podcasts y How-To Guides focusing on topics such as franchising and choosing a location (nj.gov/state/bac/assets/pdf/how/ start-a-franchise.pdf) No business is too big or small for the NJBAC to work with, and all of the services are free. To learn more, visit nj.gov/state/bac or call 1-800-JERSEY-7.

Melanie L. Willoughby is the executive director of the New Jersey Business Action Center (NJBAC), a division of the New Jersey Department of State, and can be reached at melanie.willoughby@sos.nj.gov.

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13

FINANCIAL PLANNING SERVICES

Can Financial Planning Services Double a CPA’s Income?

BY KEN HUFFMAN, CPA, CPA TO CPA, INC.

Not only is it possible for CPAs to double their income by offering financial planning services, more CPAs than ever are implementing this client service to do exactly that.

The accounting profession is a great one to be in. Surveys have shown that clients trust their CPA even more than their financial advisor.

Surveys have also shown that clients would rather obtain financial products from their CPA than a financial planner because CPAs are trusted advisors. BUT…who has time to do all of that? It’s hard enough for many CPAs to keep up with their existing business much less dip their toe into a whole new service line.

THE OPTIONS Fortunately, there are several ways to get the benefits of offering financial planning services without wearing oneself out. Here are some options: y Get licensed to offer financial planning products (securities and/or life insurance). y Outsource all the financial planning. y Implement a hybrid model where a financial planner works with the firm but is not directly employed by the firm.

y Work with CPA firm specialists that will help implement financial planning strategies into the firm. This is a turnkey approach where the financial planning personnel can be provided or the CPAs can be trained to do it themselves.

keep the bottom line healthy and the firm’s market value high. Additionally, it allows the firm to create a stream of residual income.

Residual income is something most CPA firms rarely get to participate in, unless they add financial services into their practices.

Each of these options can result in additional income for the firm.

Some CPAs hesitate to offer financial planning because they don’t want to “sell products.” However, when it comes to financial planning services, CPAs do not have to “sell” anything in order to successfully implement financial services into their firm. CPAs will simply lay out options for their clients, similar to suggesting tax strategies. The client then decides what they would like to do. The CPA can decide the types of financial planning services he or she feels comfortable offering.

LICENSING REQUIREMENTS Does a CPA have to get additional licenses to offer financial planning services? Usually, but not necessarily. It depends on how the firm structures the financial services business. However, if a CPA does have to get licensed, it’s not something that should be feared. If you passed the CPA Exam, you can pass any financial planning license exam. I’ve obtained my Series 7, Series 66 and life insurance licenses, and none have come close to the difficulty of the CPA Exam.

Now is a great time to look into the options. CPAs who implement financial planning services are more profitable and increase their firm’s market value.

IS IT WORTH IT? Is the extra money the firm will receive worth all of the effort? Absolutely! I talk with fellow CPAs all the time who have implemented financial services into their practices, and the firms are very profitable.

Having a second stream of revenue helps

Ken Huffman, CPA, is the president of CPA to CPA, Inc. and founder of Captive Nation. He can be reached at Ken@CPAtoCPA.com.

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FIRM MANAGEMENT

SPONSORED CONTENT

How CPA Firms Can Navigate Remote Staffing Challenges

BY RAYANA BARNES, QUICKFEE

The traditional 9-to-5 work structure is on its way out for nearly every industry, including accounting. Many accounting professionals no longer see themselves thriving in a physical office environment, which means that firms that don’t offer remote work could lose out on top talent.

Aside from cutting down on overhead costs, offering permanent remote work (or even hybrid work) also can lead to better retention. A recent ConvergenceCoaching study found that 81 percent of firms surveyed expect to have an increase or a significant increase in the number of people working remotely post-pandemic.

Shifting from pandemic-necessary to post-pandemic work policies requires a change in mindset for accounting firms: remote work is about more than just avoiding COVID. Firms should be looking to get ahead of this digital transformation now to improve efficiency, client relationships and employee retention in the long run.

REMOTE WORK DEMANDS Building a flexible work structure can be a great first step to retaining talent. Remote options are a major benefit to team members who have concerns about commuting, healthcare needs, limited childcare alternatives and more.

However, many CPA firms are still not ready to offer these options. The same ConvergenceCoaching study also found that only 47 percent of participating CPA firms had a structured program for remote/ flextime work.

The Great Resignation is one major consequence of employers refusing to offer any type of remote work. Professionals who had the chance to work remotely to avoid COVID, and then found the perfect work-life balance, are more likely to seek out employers that will accommodate their needs.

A recent Catalyst work-from-home study found that 76 percent of employees say they want their company to make work permanently flexible in terms of things like

schedule and/or location. The study also uncovered that roughly two in five employees are considering quitting their job because their company or manager has not cared about their concerns during the pandemic.

For most accounting firms, geographic tax laws must be taken into consideration.

Even so, it’s still worthwhile for firms to take careful stock of their client lists and service offerings before restricting employees to in-office work. Prioritizing talent means offering at least some flexibility, if not full remote work.

SUCCESSFUL FOR EVERYONE It's not just about flexibility — remote options can help your team members thrive professionally and personally.

Creating hybrid or fully remote environments can result in reduced facility costs, more-efficient collaboration and a range of global talent options. For remote work success, management teams should focus on better communication and digital policy enforcement.

General tips for successful remote work include the following: Enable flexible communications Automate workflows Encourage punctuality Strengthen IT security practices and resources y Allow 24/7 feedback y Implement cloud-based software solutions for collaboration y y y y

Even before the pandemic, businesses often achieved successful remote work environments. They accomplished this by having efficient work-from-home policies and practices and taking advantage of automation wherever possible.

remote and hybrid work environments, automation is now standard practice for operations.

There are many business areas where automation can help staff focus on work they enjoy instead of more tedious, time-consuming tasks. For example, the collections process for client payments has traditionally been conducted via mail, phone calls, paper checks and in-person transactions. But with more-efficient digital processes, CPA staff can now process payments from clients without any physical contact.

By exploring automated solutions that can support remote work structures, CPA firms don’t have to compromise on accounting talent. Even more importantly, firms will be better prepared to compete in tomorrow’s accounting marketplace.

Rayana Barnes is an experienced copywriter and content contributor to organizations like QuickFee.

QuickFee is an NJCPA member benefit provider offering digital payments and financing for CPA firms and other professional services businesses. Learn more at njcpa.org/benefits.

AUTOMATION HELPS YOUR TALENT THRIVE, TOO Automation accelerates business practices by reducing manual tasks. For firms with

NEW JERSEY CPA | SUMMER 2022

15

PROFESSIONAL DEVELOPMENT

5 Common-Sense Steps to Successful Networking

BY DANIEL KOCHKA, CPA, CFE, MBA, HBK CPAs & CONSULTANTS

As business professionals in an increasingly competitive field, the role of the CPA is ever expanding. Networking might be neither a traditional nor instinctual skill, but it is vital for seeking new business and expanding your network.

If the thought of networking is uncomfortable, rest easy, because the best way to grow your client base or business network is also the easiest. You don’t have to take a course in selling or learn a series of pressure tactics. The most critical component of networking is connection. Every CPA has multiple relationships in their daily lives and, through these connections, can build significantly larger networks.

Networking can be easy, comfortable and even enjoyable when you follow these five steps: 1. KNOW YOURSELF It is imperative to understand your style.

Taking time to reflect on who you are, how you relate to others and what type of socializing you are most comfortable with will go a long way toward building a thriving network. Answering questions such as, “Am I more formal or casual?” “Is it easier for me to strike up a conversation in a small-group setting or circulate in a large-group event?” Your answers will help you facilitate opportunities to network effectively. Knowing your style and following your interests will lead you to like-minded individuals with whom you can connect easily, perhaps through sports, community or volunteerism.

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2. KNOW YOUR TARGET Once you know how you are most comfortable making connections, you will want to think about groups to target.

Clarity about the clients you seek or contact you want to make will help you plan and use your networking time effectively. You can begin in your local area, and expertise in a particular industry is undoubtedly an advantage. Consider joining local organizations, including chapters of national organizations, representing industries in which you specialize. Participation can include speaking at meetings and conferences to share your expertise in financial matters of importance to those in attendance.

Joining and, more importantly, actively participating in organizations and lending your services in support of their mission and goals builds the most robust business relationships, those that are mutually beneficial.

3. PREPARE Once you have identified a potential target, learning as much as you can about them before making contact will foster their confidence and yours. Your preparation and understanding of how a prospect’s business and industry function and the significant challenges and requirements they face will allow them to recognize your value to them. Randomly contacting people is rarely productive; however, being prepared will help you move your targets from prospects to clients.

4. BE AUTHENTIC Being genuine and concentrating on how you can solve a prospect’s challenges will not only prove more productive but will also be more gratifying.

Focusing on helping others by providing dedicated quality service instead of thinking about networking as a sales initiative will help you develop solid professional relationships.

5. FOLLOW UP AND FOLLOW THROUGH Consistent follow up demonstrates your integrity. If you have offered to provide information or make an introduction, be sure to do it as expediently as possible. It takes time and intentional action to build relationships and make them flourish.

Seeds planted today can have far-reaching benefits in the future.

We all network daily, intentionally or not. However, when you consciously develop new relationships, you’ll see the most progress. Reap the rewards when you take the initiative, put yourself forward with integrity and authenticity, communicate effectively and follow up consistently.

In our increasingly technology-driven world, never underestimate the power of human connection.

Daniel Kochka, CPA, CFE, MBA, is a manager at HBK CPAs & Consultants. He is a member of several NJCPA interest groups and can be reached at dkochka@hbkcpa.com.

LEARN MORE June 6, June 24 and additional dates, Live Webcast GET KNOWN, GET CONNECTED, GET AHEAD: PERSONAL CONNECTION FOR PROFESSIONAL RESULTS

June 7, Live Webcast SKILLS TO DEVELOP PERSONAL AND PROFESSIONAL NETWORKS

June 20, July 18 or Aug. 17, Live Webcast NETWORKING THAT WORKS FOR LONG-TERM SUCCESS

njcpa.org/events

READ MORE CAREER DEVELOPMENT KNOWLEDGE HUB

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RISK & COMPLIANCE

What CPAs Should Know About Active Directory

BY SUSAN FIRRIOLO, CPA, CISA, PET RESCUE 990 PROJECT

Active directory (AD) is a database in every Microsoft server that stores information about devices, users, applications, shared files, permissions and other things on a network. AD is very complicated; some IT professionals do not entirely understand it. So why do CPAs need to know about it? Because it’s another point of vulnerability for a cyber attack.

AD is used to manage a network and is the most significant part of securing the network. A good way for CPAs to get acquainted with AD is to think about when a user signs into a computer. AD checks the username and password against the database.

If the credentials match what is in the database, AD allows the user login to the computer. A cyber attack on AD can reveal confidential client data, personal records of employees, bank information and everything else on the network.

Information in AD is organized in groups called objects. Objects in AD make it easy for administrators and users to find out information about the network.

Records in objects can be usernames, passwords, computers, printers, shared resources and anything else that needs to be validated.

METHODS OF ATTACK In an attack using AD, the intruder finds an entry point into a network in several ways, such as an illegitimate email, a security vulnerability, or hardware or software that is not configured correctly.

The most common way an attacker gets an entry point into a network has been by phishing. A phishing attack involves an email that appears to be from an associate, client or friend. The email contains a link

to an invoice, document, software update or something that seems important to the recipient. When the recipient clicks on the link, the attacker obtains an entry point and can install malicious software that gives them access to that computer.

Recently, ransomware attackers have been using weaknesses in applications, insufficient security procedures, internal control deficiencies or other vulnerabilities to access AD. Vulnerabilities in a network can be caused by a programming mistake, web exploit or another weakness. Because there will always be vulnerabilities, it important to download Microsoft updates (patches) when prompted to do so. Patches always seem to come at the wrong time and take so long to complete, but they are vital to helping avoid attacks caused by vulnerabilities.

Attackers also exploit misconfigurations.

Misconfigurations lead to vulnerabilities and occur in different ways. A misconfiguration can happen when hardware and software are not set up correctly or default passwords in software are not changed.

POTENTIAL DAMAGE Once the attacker gains an entry point to the network, they have established local privileges. Local privileges give the attacker access to all the information on that computer and a path to AD. Individual users with local privileges have read-only access to AD, so the attack does not end yet. After local privileges are captured, the attacker can install malicious software, disable security applications, move across the network (lateral movement) and take other actions to access AD. Lateral movement is a technique used by cyber criminals to move through a network. Most of these moves are executed by taking advantage of misconfigured devices and vulnerabilities. As the attacker makes lateral moves across the system, they can attack passwords and get more privileges in a process called mining credentials.

Ultimately, the attacker is mining for domain administrator rights. When

domain administrator rights are compromised, the attacker is able to take over the network. Since most networks contain highly confidential information about clients, employees and the firm, an attack of this nature can cause significant damage.

NEXT STEPS While a network can never be completely protected, CPAs can reduce the risk of attacks on their networks by talking to their IT administrators about securing AD. Recommended actions include the following: y y y y y y y y y y y

Review password policies Disable idle computers Ensure restricted access Delete old credentials Remove past versions of Windows Check default configurations Educate users Ensure patches are up to date Change default passwords Evaluate privileged access Backup the AD configuration regularly

Susan Firriolo, CPA, CISA, is the director and founder of Pet Rescue 990 Project, which provides online tax and advisory services for pet rescue 501(c)(3) organizations. She is a member of several NJCPA interest groups and can be reached at susan@tacs4it.com.

LEARN MORE June 14, July 11, Aug. 12 and additional dates, Live Webcast CYBERSECURITY 101 FOR CPAs

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READ MORE CYBERSECURITY KNOWLEDGE HUB

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NEW JERSEY CPA | SUMMER 2022

17

RISK & COMPLIANCE

KPIs for Fraud Prevention and Detection

BY MELISSA A. DARDANI, CPA, CFE, MD ADVISORY

Auditors and accountants rely on analytics in monitoring functions, risk assessments and substantive procedures in the audit function and in operational support.

Key performance indicators (KPIs) are measures of the components that drive a business’ value. As such, when considering financial-reporting risk, they identify areas that may be subject to manipulation as management is under pressure to meet performance expectations. Accordingly, obtaining an understanding of the KPIs relevant to a business is an integral part of the annual audit and the ongoing risk management function.

STANDARDIZING KPI PRESENTATION KPIs and other financial measures not calculated through generally accepted accounting principles (non-GAAP measures) are often relied upon by investors and stakeholders to analyze company performance through the lens of management. The inclusion and presentation of these metrics are subject to management discretion; they can typically be found in the Management Discussion and Analysis (MD&A) section of the financial statements.

While the MD&A section is not audited, it is typically reviewed by auditors to ensure there are no inconsistencies or contradic-

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tions to the information contained in the audited financial statements. It is management’s responsibility to consider the materiality of the inclusion or exclusion of the metric to financial statement users.

Issues arise due to a lack of standardization in the presentation of KPIs. For example, if two companies present KPIs with the same or similar titles but that are derived from different calculations, then it may not be appropriate to compare the two measures. In response to this concern, the Securities and Exchange Commission (SEC) released guidance in 2020 that provides a framework for disclosures that should accompany these metrics. The guidance calls for a clear definition of the metric and how it is calculated, a statement indicating the reasons why the metric provides useful information to investors, and a statement indicating how management uses the metric in managing or monitoring the performance of the business.

AUDITOR’S FOCUS Pressure, as an element of the fraud triangle, arises from internal and external sources and, for publicly traded companies, is often linked to company performance.

Management and employee compensation are often tied to KPIs. Similarly, credit rating agencies and analysts rely on certain

financial indicators when evaluating companies. Pressure arises from management’s impetus to produce favorable results.

The Public Company Accounting Oversight Board (PCAOB) AS 2110 requires auditors to identify and assess the risk of material misstatement in the financials by obtaining an understanding of the company and its environment. This risk assessment helps the auditor design appropriate risk responses within the audit plan.

During this process, AS 2110 mandates that auditors develop an understanding of the company’s strategies and business objectives, including the measures used by external parties or for reporting purposes.

The Accounting Standards Board (ASB) AU-C 315 also calls for auditors to understand the entity and its environment when identifying and assessing the risk of material misstatement in the financials.

Specifically, AU-C 315 explicitly calls for consideration of key financial ratios and performance indicators, employee performance measures and incentive compensation policies. Auditors should practice professional skepticism when considering areas within the financial statements where they may reasonably expect material misstatement.

Auditors must also understand the internal controls in place to protect the component areas comprising the relevant KPIs. Inquiries of management or the audit committee will shed light on the entity’s approach to risk management including the design and implementation of internal controls. Where inherent risk and control risk are assessed high, meaning there is a high probability internal controls would fail to detect material misstatement from error or fraud, detection risk should be set low to bring overall audit risk down to an acceptable level.

RELEVANT KPIs An understanding of relevant KPIs can be developed through discussions with management and by understanding the entity and the industry. KPIs tend to measure

RISK & COMPLIANCE

components of a business that drive value, which requires a personalized approach in the development of the audit plan.

While not all KPIs are equally important for all companies, certain KPIs, such as return on assets or return on equity, are common and may be considered for most audit clients. It is important to remember that business entities are dynamic. KPIs of interest to an organization, its management and its stakeholders are subject to change.

Accountants and auditors must evaluate these changes each year to ensure audit efforts are allocated appropriately.

LEARN MORE

READ MORE

June 15, July 1, July 20 and additional dates, Live Webcast

RISK & COMPLIANCE KNOWLEDGE HUB

WAS IT FRAUD OR JUST POOR AUDIT QUALITY?

June 18, Live Webcast WHY AUDITORS FAIL TO DETECT FRAUD

njcpa.org/hub/risk FRAUD PREVENTION & DETECTION KNOWLEDGE HUB

njcpa.org/hub/fraud

Oct. 20, Live Webcast or On Demand FRAUD BASICS: PROTECTING THE COMPANY TILL

njcpa.org/events

Melissa A. Dardani, CPA, CFE, MAcc, is the founder and managing member of MD Advisory, a boutique forensic firm. She is a member of several NJCPA interest groups and can be reached at melissa.dardani@mdas.cpa.

NEW JERSEY CPA | SUMMER 2022

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TAX

IRS Ruling Provides Insight into Section 1202 Qualified Small Business Stock

BY BENJAMIN ASPIR, CPA, MST, EISNER ADVISORY GROUP LLC

In late January 2022, the IRS released Private Letter Ruling (PLR) 202204007 in response to a request by a business seeking to determine if it is considered a qualified trade or business under IRC Sec. 1202.

The PLR provided IRS insight into IRC Sec. 1202, a crucial tax provision.

IRC SEC. 1202 Section 1202 of the Internal Revenue Code was enacted in 1993 with the goal of encouraging long-term investment in startups and other small businesses by exempting capital gains from taxation on the sale of stock in these entities. Section 1202 allows holders of qualified small business stock (QSBS) to exclude 50 percent to 100 percent of capital gains on the sale of QSBS, provided the stock meets all of the following criteria: y Issued by a domestic C corporation with no more than $50 million of gross assets at the time of and immediately after issuance y Issued by a corporation that uses at least 80 percent of its assets (by value) in an active trade or business, other than in certain personal services and types of businesses y Issued after Aug. 10, 1993 y Held by a non-corporate taxpayer y Acquired by the taxpayer on original issuance y Held for more than five years The percentage of gain on the sale of QSBS excluded from federal income tax is determined as follows: y QSBS issued from Aug. 11, 1993, to Feb. 17, 2009 = 50-percent gain exclusion

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SUMMER 2022 | NEW JERSEY CPA

y QSBS issued from Feb. 18, 2009, to Sept. 27, 2010 = 75-percent gain exclusion y QSBS issued from Sept. 28, 2010, to present = 100-percent gain exclusion The amount of gain eligible for exclusion is limited to the greater of $10 million or 10 times the taxpayer’s basis in the QSBS. PLR 202204007 A taxpayer that operates a business that facilitates the leasing of property between lessors and lessees requested a PLR to determine whether their business is engaged in the field of “brokerage services,” which would not be a qualified trade or business for purposes of IRC Sec. 1202.

The taxpayer’s website allows potential lessees to make non-binding reservations for the use of certain facilities at specified rental rates from lessors in the website database. The taxpayer has no authority to enter into or sign leases on behalf of the potential lessors or lessees. Potential lessees do not pay any fee to the business for the use of its website.

The taxpayer charges lessors a recurring fee for being listed in the database and a contingent fee based on a percentage of rent paid by a lessee leasing a facility from a lessor through the database. The taxpayer asserted to the IRS that it is not a broker with respect to the leasing of the facilities.

The taxpayer also provided other services to lessors such as website building and hosting to be used in conjunction with the leasing of the lessor’s facility.

The Internal Revenue Code does not define the term brokerage services in the context of IRC Sec. 1202. Therefore, the IRS turned to several other Code sections and tax regulations that discuss the definition of “brokerage services” (IRC Secs. 199A, 448 and 6045). Additionally, the PLR discussed the dictionary definition of the word “broker.”

The IRS concluded in its PLR that the taxpayer should be classified as a broker under the common meaning of the term and as it is defined under IRC Sec. 6045, rather than the narrower definition that applies to IRC Sec. 199A. The IRS disagreed with the taxpayer’s assertion that its website merely provided an advertising service and was not a broker.

TAX

The IRS stated the following reasons for its position: y The taxpayer did not merely passively publish advertisements on its website. y The taxpayer’s website was solely devoted to effectuating agreements between potential lessors and potential lessees of certain property. y The taxpayer was compensated on a commission basis based on leasing transactions that were entered into as the result of the use of its website.

y The website was merely a vehicle for potential lessees to transmit non-binding reservation requests to potential lessors.

While the ruling is not favorable for the taxpayer, it provides much-needed clarity on the rules of QSBS. It is important to note that a PLR can only be cited as precedent for the requesting taxpayer.

Benjamin Aspir, CPA, MST, is a senior manager at Eisner Advisory Group LLC. He is the leader of the Federal Taxation Interest Group and can be reached at benjamin.aspir@eisneramper.com.

READ MORE FEDERAL TAXATION KNOWLEDGE HUB

njcpa.org/hub/federaltax

DO MORE JOIN THE FEDERAL TAXATION INTEREST GROUP

njcpa.org/groups

y The taxpayer did not have the authority to enter into leasing agreements on behalf of lessors that use its services.

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TAX

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SUMMER 2022 | NEW JERSEY CPA

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NJCPA NEWS

2022/23 NJCPA Leaders The following NJCPA members are serving as officers, trustees, chapter presidents, committee chairs and interest group leaders from June 1, 2022, through May 31, 2023.

EXECUTIVE COMMITTEE

PRESIDENT

PRESIDENT-ELECT

SECRETARY

KATHLEEN F. POWERS, CPA

EDWARD G. O’CONNELL, CPA, CGMA, CFF, CFE

JOHN M. SZCZOMAK, CPA

WithumSmith+Brown

Smolin, Lupin & Co., P.A.

TREASURER

IMMEDIATE PAST PRESIDENT

CEO & EXECUTIVE DIRECTOR

JUNE M. TOTH, CPA, CFF, CITP, CGMA

HARRY P. WILLS III, CPA, CGMA

RALPH ALBERT THOMAS, CPA (DC), CGMA

ZBT Certified Public Accounting & Consulting, LLC

Bowman & Company LLP

NJCPA

Matheny Medical and Educational Center

To learn more about our Executive Committee, visit njcpa.org/about/board.

NEW JERSEY CPA | SUMMER 2022

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NJCPA NEWS

BOARD OF TRUSTEES

BRENT M. ASHTON, CPA

KATHLEEN BERNARD, CPA

ISABEL DEL CORRAL, CPA

NICOLE M. DeROSA, CPA, MAcc

Ernst & Young LLP

Lota & Bernard, LLP

McIntee Fusaro Del Corral, LLC

Wiss & Company LLP

JOANNE GEYLIN, CPA

JESSE M. HERSCHBEIN, CPA, CGMA

ALTHEIA LEDUC, CPA

CHRISTOPHER M. LOVASZ, CPA

Geylin & Associates, PC

CohnReznick LLP

Gold Gerstein Group LLC

Deloitte

BRIAN G. NAFASH, CPA

DR. SEAN STEIN SMITH, CPA, CFE, CGMA, CMA, DBA

MICHAEL A. STILLITANO, CPA

KATHERINE E. ZECH, CPA

National Retail Systems

PKF O’Connor Davies, LLP

Massood & Company, P.A.

Lehman College (CUNY) 24

SUMMER 2022 | NEW JERSEY CPA

NJCPA NEWS

CHAPTER PRESIDENTS

INTEREST GROUP LEADERS/COMMITTEE CHAIRS

ATLANTIC/CAPE MAY Nancy Sbrolla, CPA, RMA Ford, Scott & Associates LLC

Accounting & Auditing Standards Interest Group Michael S. Kaplan, CPA Smolin, Lupin & Co., P.A.

Emerging Technologies Interest Group Mark W. Eckerle, CPA WithumSmith+Brown

Professional Conduct Committee Lori A. West, CPA Grant Thornton LLP

Audit Committee Robert J. Valas, CPA/ABV, CVA, CFE, CGMA Cullari Callico LLC

Federal Taxation Interest Group Benjamin Aspir, CPA EisnerAmper LLP

Retirement Savings Plan Committee Kathleen F. Powers, CPA Matheny Medical and Educational Center

Business & Industry Professionals Interest Group Christopher Schiffer, CPA, CFP, MBA, AIF Wealth Enhancement Group

Finance Committee June M. Toth, CPA, CFF, CITP, CGMA ZBT Certified Public Accounting & Consulting, LLC

Cannabis Interest Group Alex E. Krasnomowitz, CPA Alex E. Krasnomowitz, CPA, LLC

Governmental Accounting & Auditing Interest Group Jerry W. Conaty, CPA, CFE Holman Frenia Allison, P.C.

BERGEN Joseph Inauen, CPA Joseph Inauen, CPA ESSEX Alexandra M. Guccione, CPA Coach, Inc. HUDSON Gerald P. Campbell, CPA, MBA Retina Group PC MERCER Kathleen P. Bloch, CPA, MBA CytoSorbents, Inc. MIDDLESEX/SOMERSET Catherine Z. Horn, CPA, CGMA, SPHR JGT Management Company, LLC MONMOUTH/OCEAN Annemarie Zeni, CPA AccuTitle

Chapter Operations Committee George S. Charne, CPA Sax LLP

MORRIS/SUSSEX Olivia Campaniolo, CPA, CGMA, PSA, MBA World Insurance Associates LLC

Committee Operations Committee Amy MacFadyen, CPA EisnerAmper LLP

PASSAIC COUNTY Rudy T. Ipekcian, CPA BDO USA, LLP

Education Foundation Executive Committee Brad E. Muniz, CPA SobelCo

SOUTHWEST JERSEY Reynold Cicalese III, CPA, MST Alloy Silverstein Accountants and Advisors UNION COUNTY Keri L. Giacomelli, CPA, MBA WilkinGuttenplan Learn more about our chapter presidents and the activities taking place in their chapters at njcpa.org/chapters.

Emerging Leaders Council Zachary B. Cohen, CPA CFGI Emerging Leaders Interest Group Zachary B. Cohen, CPA CFGI

Investment Committee Teresa L. Zipf, CPA, CFP Benjamin F. Edwards & Co. NJCPA-CPA-PAC Gary W. Higgins, CPA Lerch, Vinci & Higgins, LLP NJCPA Scholarship Fund Henrietta G. Fuchs, CPA CohnReznick LLP Nominating Committee Alan D. Sobel, CPA, CGMA SobelCo

State Taxation Interest Group Jason L. Rosenberg, CPA, EA, MST, CGMA WithumSmith+Brown Strategic Planning Committee Karl A. Halteman, CPA, CGMA ReSource Pro Student Programs & Scholarships Committee Tara M. Baldwin, CPA WilkinGuttenplan Volunteer Relations Committee Amy Y. Both, CPA WithumSmith+Brown Learn more and join interest groups at njcpa.org/ groups.

Nonprofit Interest Group Robert J. Dethlefsen, CPA, CGMA, MBA Robert Dethlefsen, CPA Peer Review Executive Committee Michael M. Wolansky, CPA Buchbinder Tunick & Company LLP

NEW JERSEY CPA | SUMMER 2022

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NJCPA NEWS

The CPA Pipeline — Addressing the Decline

BY DON MEYER, CAE, NJCPA CHIEF MARKETING OFFICER

members will enable young professionals to take advantage of the benefits of membership (e.g., discounts, training) while the NJCPA showcases to them the relevance and benefits of the CPA credential.

In addition to including graduates who have completed the academic requirements to become a CPA and are pursuing further requirements necessary to become a CPA, the Affiliate class would also be available to the following professionals: It’s been said many times in emails to members and in these pages: the accounting profession has a pipeline problem. The demand for CPAs is high, but the number of recruits is low, and the situation was exacerbated even more by the pandemic as workers’ priorities shifted and career paths were re-evaluated.

The NJCPA Board of Trustees and other stakeholders in the profession are focused on addressing these challenges along with anticipating the ongoing changes shaping the Society. As the pace of change increases, we are accelerating our efforts on initiatives that attract, inspire and engage the next generation of CPAs. The first step is reevaluating the NJCPA’s membership classes: Fellow, Associate (for Chartered Accountants), CPA Candidate and Student. The categories have been in place for decades, and, in all cases, the category definition or even the category name itself needs to be updated to align with today’s accounting profession. The NJCPA Board recently approved the following membership structure changes, all of which will require approval by the membership via a bylaws vote: y The CPA Candidate and Associate membership classes will be eliminated. y A new membership class named Affiliate will be created. y The definition of Student Member will be changed to “An undergraduate or graduate student who has an interest

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SUMMER 2022 | NEW JERSEY CPA

in accounting, finance, business or information systems.” y The Fellow member class will be renamed to CPA member (criteria and pricing remain the same).

SEIZING THE OPPORTUNITY The membership structure change with the biggest opportunity for impact is the creation of the new Affiliate category.

For more than 20 years, the Society’s CPA Candidate class has welcomed graduates who have completed the academic requirements to become a CPA and are pursuing further requirements necessary to become a CPA. But times and attitudes have changed. Less than 10 percent of graduating NJCPA Student members move up to the CPA Candidate category, and there’s been a 45-percent drop in CPA Candidates since 2016.

Our greatest opportunity for bringing new candidates into the pipeline is to focus on supporting students and those who are still unsure about becoming a CPA. According to the National Association of State Boards of Accountancy (NASBA), the average age of successful CPA Exam candidates is 29. But our current membership structure for graduates is based on what we want them to do right away, not what they want out of their careers long-term.

The NJCPA needs to hold onto graduates and young professionals by removing membership barriers. Establishing the new Affiliate class and providing one year of free membership for graduating Student

y Professional staff working in an accounting or finance position or employed by or under the supervision of a CPA y Instructors of accountancy y Non-CPA owners of firms licensed by the New Jersey State Board of Accountancy According to research conducted by the American Institute of CPAs (AICPA), two of the biggest influencers on a graduate’s decision to pursue the CPA Exam are their employer and college professors. As Affiliate members, educators and non-CPA owners would be able to participate in education, outreach and other critical programs designed to showcase the relevance and benefits of the CPA credential. These individuals are valuable members of the accounting and finance profession, and, thus, can be valuable members of the NJCPA community.

To create a clear distinction between the CPA and Affiliate classes, Affiliates will not be eligible to vote on ballot measures presented to the full CPA membership and will not be permitted to serve as officers on the NJCPA Board of Trustees.

Information on all the changes detailed above will be provided to members over the course of the summer and fall via this magazine, email, webinars and the NJCPA website. The bylaws vote is currently scheduled to take place after Oct. 15, 2022.

In the meantime, for more information, visit njcpa.org/bylaws.

NJCPA NEWS | EXHIBITOR MARKETPLACE

Convention Exhibitors Help CPAs Facilitate Change The 2022 NJCPA Convention & Expo, “The Way Forward: Transform. Innovate. Grow,” to be held June 14-17 at the Borgata in Atlantic City, will lead CPAs and other accounting professionals to break out of their comfort zone and digest new ways of operating and thinking about business prospects. A vast array of exhibitors will be available to direct attendees on how best to succeed in a post-COVID environment and beyond.

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COLUMBIA BANK

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CRSP CONNECT LLC

M&T BANK

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NJCPA NEWS

NJCPA NEWS | EXHIBITOR MARKETPLACE

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SUMMER 2022 | NEW JERSEY CPA

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NJCPA NEWS

NJCPA Awards Student Scholarships

The NJCPA Scholarship Fund awarded approximately $230,000 in scholarships to more than 55 New Jersey high school and college students on April 26. The awards were distributed at its 62nd Annual Scholarship Awards Ceremony at the Pines Manor in Edison, after a two-year hiatus from in-person ceremonies due to the COVID-19 pandemic. Recipients’ families were also able to attend.

Out of more than 165 applications, 22 college-bound high school seniors were given $1,500 each, which includes six recipients of a new Deloitte Minority High School Scholarship. Funded by Deloitte

Foundation, this new scholarship was created to open the doors to the accounting profession for New Jersey high school seniors who are racially or ethnically diverse and considering accounting as their college major. Multiple scholarships of $1,500 were awarded to qualifying applicants from the following three New Jersey high schools as part of the pilot program: Rahway High School, West Orange High School and New Brunswick High School.

Awards were also distributed to 35 college students, with 25 receiving $6,500 each, eight sophomores receiving $2,000 each, and two receiving $5,500 American Institute of CPAs (AICPA)/NJCPA Minority Scholarships. Others received NJCPA/National Association of Black Accountants — Northern New Jersey Chapter Awards.

Those applying for the high school award had to be seniors who intend to major in accounting, while the college applicants had to be New Jersey college or university students who are currently in their sophomore or junior year or in their senior year and entering an accountingrelated graduate program.

“It was wonderful to be able to meet the students who are receiving the scholarships in person this year. The scholarships provide financial relief but also, most importantly,

encourage them to pursue a career in accounting,” said Henrietta Fuchs, CPA, president of the NJCPA Scholarship Fund and partner at CohnReznick LLP. “It’s always a thrill to be able to assist such young, talented individuals,” said Ralph Albert Thomas, CPA (DC), CGMA, CEO and executive director of the NJCPA. “This would not have been possible if it wasn’t for the generosity of our members and firm/company benefactors.”

This year’s firm/company benefactors include the following: y y y y y y y y y y y y

Bowman & Company LLP CohnReznick LLP Deloitte and the Deloitte Foundation EisnerAmper Frazer, Evangelista & Company, LLC Holman, Frenia, Allison, PC Mazars USA LLP PKF O’Connor Davies LLP Smolin, Lupin & Co., P.A. Untracht Early LLC WilkinGuttenplan WithumSmith+Brown

Scholarships are awarded based on academic performance, standardized test scores, essays and personal interviews.

For a complete list of the winners, visit njcpa/scholarships.

NEW JERSEY CPA | SUMMER 2022

29

NJCPA NEWS

Members Give Free Advice for 2022 Tax Season NJCPA members spent the 2022 tax season and the weeks leading up to it helping the community at large, participating in media interviews and providing comments and articles.

TAX Q&A PROGRAM The NJCPA held its annual Tax Q&A program virtually on March 5 in conjunction with the Asbury Park Press. Dozens of individuals and small business owners throughout New Jersey received free income tax advice from NJCPA members on questions related to everything from COVID-19 relief reporting and income limits for tax credits to unemployment benefits.

“I think the main service we provide is consultative in nature and we give enlightenment to persons that might otherwise think they do not need the experience and expertise of a professional,” said Robert A. Fodera, CPA, a partner at Baker Tilly and a volunteer for the Q&A program.

Similarly, volunteer Olga Lubomirsky, CPA, MST, a senior tax manager in private client services at Mazars USA LLP, saw a genuine need for their services. “All callers were absolutely very grateful, and some said, ‘God bless you for what you do’ and it definitely warms our hearts,” she added.

The NJCPA thanks the following member volunteers who donated their time to the Q&A program: y Christopher M. Arunkumar, CPA — Breakpoint Assurance Company

y Neil B. Becourtney, CPA — CohnReznick LLP y Sean P. Breheney, CPA — PKF O’Connor Davies, LLP y Christopher R. Cicalese, CPA — Alloy, Silverstein, Shapiro, Adams, Mulford, Cicalese, Wilson & Co. y Melanie Cobb, CPA — Abacus Financial LLC y Robert A. Fodera, CPA — Baker Tilly y Olga Lubomirsky, CPA — Mazars USA LLP y Payal D. Parikh, CPA — Mazars USA LLP y June M. Toth, CPA — zbt Certified Public Accounting & Consulting, LLC y Kimberly Wilkinson, CPA — Wiss & Company, LLP MEDIA INTERVIEWS NJCPA members also gave their time to speak with local and national media outlets to educate the public about tax issues during the 2022 tax season.

We would like to acknowledge the following volunteers for their time spent discussing many issues that are important to taxpayers: y Andrea Diaz, CPA, SKC & Co., CPAs, LLC, who was interviewed by NJ Spotlight News, represented the profession at a press conference hosted

by Senator Robert Menendez about IRS service issues and was interviewed for Business Beat with Rhonda Schaffler.

y Nicole M. DeRosa, CPA, MAcc, Wiss & Company, LLP, who was interviewed

by NJ 101.5 and News 12 New Jersey y Melissa Dardani, CPA, MD Advisory, who was interviewed by NJ 101.5 y Craig R. Johnson, CPA, Holman Frenia Allison, P.C., who was interviewed by the Asbury Park Press y Christopher R. Cicalese, CPA, MSTFP, Alloy Silverstein, who appeared on Yahoo! Finance Live y June M. Toth, CPA, CFF, CITP, CGMA, ZBT Certified Public Accounting & Consulting, LLC, who was interviewed

by WRNJ radio and Marketwatch AUTHORED ARTICLES Members also put their time into crafting original and well-thought-out articles for a special NJCPA section of the January 2022 edition of New Jersey Business magazine called “Tax Preparations Beyond the Pandemic.”

Participants included: y Jason Rosenberg, CPA, CGMA, EA, MST, Withum y Benjamin Aspir, CPA, MST, EisnerAmper y Nicole M. DeRosa, CPA, MAcc, Wiss & Company, LLP y Alan D. Sobel, CPA, CGMA, SobelCo y Cara DiLorenzo, Bederson LP To be considered for future tax Q&A sessions or media opportunities, sign up at njcpa.org/volunteer.

In Memoriam The NJCPA is saddened by the passing of Lawrence (Larry) R. Cinquegrana, CPA, MBA, of Saddle River, a president of the NJCPA for the 1982/83 year. Larry, who passed away on Feb. 7 at the age of 84, was a managing partner at R.D. Hunter & Co. (now part of Sax LLP) and held various positions at Hunter for more than 50 years.

Larry will be remembered for his dedication and service to the NJCPA and the accounting profession. While at the NJCPA, he was a president of the Bergen Chapter and actively participated in task forces and committees related to CPE, small and midsize firms, and private companies. Cited for his “uncompromising work ethic,” Larry was also the CFO of Challenge Printing Company and worked professionally until the age of 81.

“We are grateful to members like Larry for their service in furthering the role of the accounting profession and working to maintain the industry’s high ethical standards,” said Ralph Albert Thomas, CPA (DC), CGMA, CEO and executive director at the NJCPA. Larry is predeceased by his wife, Susan, and is survived by five children and nine grandchildren.

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SUMMER 2022 | NEW JERSEY CPA

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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 800-8395767 to have a confidential conversation.

Whitman Business Advisors www.whitmanbiz.com has been helping CPA firms with their M&A needs since 2008. We are working with several non-NJ headquartered firms that are looking for a foundational firm to expand their foot-print into NJ. If your revenues exceed $2.5MM annually then we should talk today!

To confidentially discuss this opportunity, please email us at pw@whitmanbiz.com.

Matthews, Panariello P.C., a well established full service Bergen County firm located in Paramus, is looking to acquire firms, sole practitioners, or accounts (audits, reviews, and tax preparation) ranging in size from $100,000 to $950,000. We are a peer reviewed firm with a strong track record of client satisfaction and retention. We have been successful in prior acquisitions; let's talk. Please visit our website at www.mpcpas.com. To confidentially discuss this opportunity, email Peter at pmanetta@mpcpas.com.

Traphagen CPAs & Wealth Advisors, a well-established firm in Bergen County with diverse client base and credentialed support staff is seeking small firms and sole practitioners for acquisition or merger. We are looking for firms ranging in size from $300K to $700K. This is an opportunity to align with a quality peer- reviewed firm,

while continuing to provide your clients with exceptional service. To confidentially discuss this opportunity, please email us at carolynn@tfgllc.com.

Straight Talk CPAs, a well-established firm in Central Jersey with a diverse client base and credentialed staff is seeking small firms and sole practitioners for acquisition or merger in New Jersey. We are looking for firms ranging in size from $300K to $1M. This is an opportunity to align with a quality firm, while continuing to provide your clients with exceptional service. To confidentially discuss this opportunity, please email us at rod@straighttalkcpas.com.

For 17 years, Accountants Advisory Group has been specializing in M&A nationwide with a focus on firms of all sizes in NJ and NY. We work with both parties from beginning to end while finding the best possible strategic and cultural matches.

We advise and consult during negotiations, preparing LOIs, and working with attorneys on closing documents. If you are seeking an M&A transaction or advice if M&A is your best option, email Joe Tarasco joe@accountantsadvisory.com.

New Jersey practices for sale: gross revenues shown: southeast Passaic Co. CPA $700k; lower Bucks Co. CPA 885k; Atlantic/Cape May Co. $260k; Salem Co. Tax and Accounting $500K; Essex Co. CPA $500K; far south Middlesex Co. CPA $492K; Passaic/Sussex Co. CPA $518K; Gloucester/Atlantic Co. CPA $615K; Morris Co. partnership interest, for more information, call 800-397-0249 or visit www.aps.net.

PROFESSIONAL SERVICES

Quality Review for CPA firms: audit, review, compilation, employee benefit plans, Yellow Book, revenue recognition.

Contact James M. Sausmer, CPA at 732-261-7710 or james.sausmer@gmail.com.

Do you have your WISP? According to the IRS, you need a WISP! Not only can eMDTec help you with putting together your WISP, but we can also provide the technical services needed for compliance with our managed I.T. service plan. At eMDTec, we ensure your I.T. operations align to help you work seamlessly and keep your data safe. Contact us at sales@ emdtec.com or call 973-239-2160 today! www.emdtec.com.

To see additional classified listings or to place an ad, visit njcpa.org/classifieds.

ADVERTISERS INDEX 14 ACCOUNTING PRACTICE SALES

aps.net

7

ADP

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29 AMERIPRISE FINANCIAL/JAY MOTA

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C2 CAMICO/GALLAGHER AFFINITY

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13 CAPSTAN

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28 COST RECOVERY SOLUTIONS LLC

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28 DRAKE SOFTWARE

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28 ELEPHANT CPA

Retirement-minded Burlington County CPA looking to transition ownership of well established accounting, write-up and tax practice.

Annual billings of $450k. Commercial real estate also available. Reply in confidence at njcpa.org/classifieds.

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PAYCHEX

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28 PEAPACK-GLADSTONE BANK

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21 PLYMOUTH ROCK

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19 SPENCER SAVINGS BANK

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NEW JERSEY CPA | SUMMER 2022

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MEMBER STORY

all trades and become a better manager of your time.” He adds, “Every mistake costs time and money so I find myself performing more review and oversight of my work.

Going from being an employee to a business owner is a major shift, but it has been a rewarding and empowering experience.”

A CPA’s Journey to Set Out on His Own

BY KATHLEEN HOFFELDER, NJCPA SENIOR CONTENT EDITOR

The COVID-19 pandemic shifted expectations, altered workspaces and provided a new new sense of reality for just about everything and everyone. For Matthew M. Rambaran, CPA, MBA, it provided the impetus he needed to launch his own accounting firm.

With nearly 12 years of experience gained while working at small and midsize accounting firms throughout New Jersey and Pennsylvania, Matthew was more than ready this past January to head out on his own. “I was feeling a bit burned out from the last two years of COVID. Accountants were quick to adapt to remote working, but the volume of work had compounded due to new stimulus programs, revenue recognition, extension of tax deadlines and other COVID economic factors. There was a lot of pressure, but at the same time, the economic landscape presented tremendous opportunities. I felt the timing was ideal and opportunity abundant so I said, I’m going for it,” recalls Matthew, now the owner and managing member of Rambaran Accountants & Advisors in Lambertville.

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SUMMER 2022 | NEW JERSEY CPA

Putting all his expertise to work, Matthew’s firm specializes in outsourced accounting and bookkeeping, small business tax and technology support and implementation. “We focus on automating processes and implementing technologies to create efficiencies that simplify basic and sometimes complex accounting functions.”

Prior to launching his firm, Matthew worked at CliftonLarsonAllen (CLA) as a controller of outsourced accounting serving the telecommunications industry, was an assurance manager at RSM US LLP and worked at other accounting firms in southern New Jersey. “When COVID hit, I was working for CLA. With the introduction of the Paycheck Protection Program (PPP), I became deeply immersed in the subject. Over the last two years I covered PPP and other COVID stimulus topics, developing technically and further evolving my confidence through public speaking opportunities,” he explains.

After making the move to his own firm, he acknowledges, “You become a jack of

DEI’S INFLUENCE Being an immigrant from Trinidad and Tobago and moving to New Jersey with his parents when he was a toddler also helped shape Matthew’s decision to launch his firm. “Growing up in an immigrant household, the pursuit of the American dream has always captivated me. My family’s immigration story continuously inspires me and has cultivated an entrepreneurial spirit within me. The courage to take risks is part of my history and thus it has inspired me to launch my practice.”

In harmony with this upbringing and heritage, Matthew heralds diversity, equity and inclusion (DEI) as critical drivers of his community involvement. He currently serves as an NJCPA Diversity & Inclusion Task Force member and has served as a board member of the Philadelphia Chapter of the National Association of Black Accountants (NABA). “Serving on the NABA board has allowed me to share my experiences and insights with students and peers who look like me with the intention of building a pipeline of diverse professionals,” he says. “As a business owner, I have a renewed outlook on DEI with a focus on helping other diverse professionals explore entrepreneurial aspirations.”

Not one to forget his childhood pastime of skateboarding and biking, he currently serves as a board member of Freedom Skate Park, a program supporting inner-city kids in Trenton.

Looking for new talent or opportunities?

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