New Jersey CPA - Winter 2023/24

WINTER 2023/24

TAX RETURN IDENTITY THEFT WILL IT EVER GO AWAY? YEAR-END PLANNING: STRATEGIES AND CONSIDERATIONS ESG: POSITIONING A COMPANY FOR SUCCESS

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contents WINTER 2023/24

THE MAGAZINE OF THE NEW JERSEY SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS

4 Tax Return Identity Theft — Will It Ever Go Away?

AIYSHA (AJ) JOHNSON, MA, IOM Chief Executive Officer & Executive Director ajohnson@njcpa.org THERESA HINTON Chief Operating Officer thinton@njcpa.org DON MEYER, CAE Chief Marketing Officer dmeyer@njcpa.org RACHAEL BELL, CAE Managing Editor rbell@njcpa.org KATHLEEN HOFFELDER, MA Senior Content Editor khoffelder@njcpa.org DIANE ESPIRITU Senior 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

While nothing is certain except death and taxes, identity theft likely has to be added to that list. As we approach the tax filing season, practitioners will need to be on watch for scams against themselves, their clients and their organizations and understand how to help clients who have been victims of identity theft.

6 Year-End Planning: Strategies and Considerations

The last calendar quarter of the year is a great time to take advantage of some rapid-fire tax savings. Year-end tax planning should include recently passed legislation as well as practical know-how on delaying required minimum distributions and considering a Roth conversion, to name a few.

8 ESG: Positioning a Company for Success

With environmental, social and governance (ESG) initiatives taking on an increasing priority on many boards’ agendas, it’s imperative that CPAs take a closer look at the latest developments in ESG to position their organizations or clients for success.

2 CLOSE UP

13 FIRM MANAGEMENT

Work for Credit Programs Gain Ground

Evolving Accounting Firm Culture

3 OPINION

Engagement Letter Provisions in a Dynamic and Rapidly Changing Profession

Eliminating the New Jersey Corporate Tax is Good Policy 10 ACCOUNTING, AUDITING & ATTEST

Crypto Attestation Updates and Trends 11 BUSINESS MANAGEMENT SPONSORED CONTENT

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How to Set Up a 401(k) Plan for Small-Business Employees SPONSORED CONTENT

The Bewildering World of Cash Discounts and Surcharging

16 INDUSTRIES

Giving Tech and Biotech Startups a Leg Up 17 LITIGATION SERVICES & BUSINESS VALUATION

Considerations When Providing Valuation Services in Litigation and Investigations 18 PROFESSIONAL DEVELOPMENT

Building Your Personal Brand

19 RISK & COMPLIANCE

10 Ways to Manage Your Cyber Crime Security Like You Mean It! 22 TAX

Navigating the Complex World of Sales Tax Compliance 23 NJCPA NEWS

y 2023 Ovation Awards y Scholarship Applications Due y NJCPA Publishes Audit Report 43 CLASSIFIEDS 44 MEMBER PROFILE

John Gibney, CPA, CFE

CLOSE UP

Work for Credit Programs Gain Ground

BY AIYSHA JOHNSON (AJ), MA, IOM, NJCPA CEO AND EXECUTIVE DIRECTOR

The NJCPA welcomes initiatives to combat the declining pipeline of CPA candidates.

Withum and Seton Hall University recently teamed up to offer a one-year pilot program of paid, full-time employment to five Seton Hall graduates looking to complete the 150-credit hour requirement necessary for CPA licensure. This comes in the wake of Saint Peter’s University and PwC joining forces to offer a work-for-credit program that assists students in obtaining the extra credits necessary in a more economically feasible way.

Aptly called The CPA Pathway Apprenticeship, Withum and Seton Hall’s initiative created a way for six Seton Hall graduates to work at Withum, be paid a full-time salary and achieve the additional 30 credit hours necessary to fulfill CPA licensure requirements. If they take their CPA Exam during that time, they could also start as entry-level Staff I team membersat Withum.

The students will have the opportunity to work in all service lines and industries while earning the credits.

Similarly, under the first year of the Saint Peter’s/PwC program, six participants received the 30 credits required to be licensed as a CPA. PwC covered the cost of tuition and paid the participants as full-time employees. The program is now in its second year. In 2021, PwC joined forces with Northeastern University for a similar program targeting Black and Latinx students.

The NJCPA applauds programs like these and supports the efforts by the American Institute of CPAs (AICPA) and the National Association of State Boards of Accountancy (NASBA) to reduce the financial burden for aspiring CPAs. According to a Center for Audit Quality report, the 150-credit-hour requirement was among the major hindrances in becoming a CPA and was the biggest reason among Black and Hispanic business-related majors. In August, the AICPA and NASBA launched a post-graduate program with the Tulane School of Professional Advancement called Experience, Learn and Earn (ELE).

Participating firms will team up with Tulane to work with the students and allow them time to study and apply what they learn. Through ELE, students can earn up to 30 credits at a reduced rate.

We encourage more schools and CPA firms to get involved with assisting young professionals on their journey towards CPA licensure. Reducing barriers is an important part of growing the CPA pipeline. While these programs eliminate the cost of the extra credits and the common

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. 97 Copyright © 2023 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.

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WINTER 2023/24 | NEW JERSEY CPA

practice of students taking any courses to fulfill those credit requirements above the usual 120-credit college course load, it also assists with entry-level hiring needs that accounting firms may have.

NEW CPA EXAM ON TAP CPA Evolution and the launch of the new CPA Exam in January are also part of the initiative to increase the number of accounting professionals. Instituting the new core+ discipline model of the CPA Exam should more closely align with current day-to-day demands of the profession and those of the future. Having a deeper emphasis on technology will bring the profession forward.

Under the new CPA Exam, the current Auditing & Attestation (AUD), Financial Accounting & Reporting (FAR) and Taxation & Regulation (REG) sections will comprise the new core section, and the current Business Environment and Concepts (BEC) section will be replaced with a selection of one discipline in the areas of Business Analysis & Reporting (BAR), Information Systems & Controls (ISC) and Tax Compliance & Planning (TCP).

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OPINION

Eliminating the New Jersey Corporate Tax is Good Policy

BY RICHARD F. KEEVEY, RUTGERS UNIVERSITY

Much is written concerning the need to attract and retain businesses in New Jersey. A common practice is to offer tax incentives to either retain corporations that are ‘thinking about’ or ‘threatening’ to move to a better business climate.

There is much debate as to the effectiveness of these subsidies. To oversimplify the argument, some suggest that offering these deductions encourages corporations to settle or stay in New Jersey, and, in the long run, the economy here will expand and new jobs will be brought to or retained in the state that otherwise would not happen.

Others argue that tax incentives are an ineffective tool because, among other reasons, they so often reward companies for actions they would have taken anyway.

Furthermore, the argument is made that corporations make decisions about locating or retaining business in New Jersey based not just on the corporate tax climate but on our location, the highly educated workforce, desirable communities and good schools.

The corporate tax has several problems with its structure. Specifically: The taxable value of the entity is measured by net income. While net income may be conceptually appealing as a measure of economic value, in the real world of separate entity accounting, pass-through entities and extensive deductions, it does not adequately measure business activity. Net income is hardly an objective measure. Rather it has extensive loopholes that allow the tax to be evaded or reduced for certain corporations. Two other points: y The Governor and Legislature frequently enact legislation to lessen the impact on certain corporations. Some corporations receive these credits and deductions; others do not. y The tax is highly inefficient to administer by the state — and likewise for corporations.

The last two points are illustrative of taxation at its worst — it is neither equitable nor easy to enforce or collect.

Currently, there is an army of state government tax examiners and lawyers trying to understand how each corporation limits its payments and a like army of corporate financial wizards trying to understand the extensive and complicated tax code and how they can limit their liability. These resources could be used more effectively.

The corporation business tax (CBT) is a broken tax that does not meet the needs of businesses or the state. It should be replaced with a simpler business tax that has low costs of compliance and administration, is not dependent on corporate form and raises revenue from the broadest number of entities.

A true “franchise” tax is best, with the activity measured not by net income but by gross profits — New Jersey receipts less deductions for cost of goods sold and normal employment costs. No credits, no other deductions for expenses, no loopholes — just a simple computation based upon an acceptable and logical base. There is a wide range of fee or rate schedules that can be designed to generate as much as the current CBT generates — or more or less — depending on state tax policy.

As with any proposal that dramatically changes the base for taxation, some will oppose it. It will be called unfair because it imposes a tax on all businesses regardless of profitability. The real question: Is there an easier, more-equitable way to tax business than our current complex, unfair and highly inefficient mix of laws? These and other arguments could go on and on, and frankly are examples of why the present system is so complicated and why we are constantly legislating deductions, credits and other loopholes for certain corporations.

The goal of tax policy should be to treat all businesses, regardless of form, fairly. The current tax policy is riddled with loopholes and is easy to manipulate. A reliance on net

income to measure profitability or activity, while theoretically attractive to the purist, is fatally flawed in practical application.

In my judgment, the conclusion is clear: The corporate income tax is broken and should be eliminated and replaced with a simple tax on all business activity regardless of corporate form and levied on a logical and recognizable base not subject to easy manipulation. More importantly, think what incentive it would present to businesses thinking of coming to or staying in our state if New Jersey eliminated the complicated corporate tax and replaced it with an equitable, understandable tax that did not require an army of high-priced staff. Unlike the CBT, this tax is simple and does not distort business decisions, does not discriminate between business types and need not impose an undue burden on any business entity. That’s truly business friendly.

Richard F. Keevey is the former budget director for the state of New Jersey. He was also appointed by the president as the CFO at the U.S. Department of Housing and Urban Development (HUD) and as the deputy undersecretary of defense. He is currently a senior policy fellow at Rutgers University.

What do you think?

Let us know at feedback@njcpa.org.

The opinions expressed above are those of the author.

They do not purport to reflect the opinions or views of the NJCPA or its members.

NEW JERSEY CPA | WINTER 2023/24

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TAX RETURN IDENTITY THEFT — WILL IT EVER GO AWAY?

By NEIL B. BECOURTNEY, CPA SMOLIN, LUPIN & CO., LLC

As we embark on the 2023 tax filing season, I wish I could say that tax return identity theft has been eradicated, but that is simply not the case.

Unfortunately, it is something that practitioners are likely going to continue to be burdened with. Here are some insights on this subject that I have dealt with on behalf of many taxpayers over the years.

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E-FILING REJECTION Typically, tax practitioners find out about an identity theft situation when our tax software produces an e-filing rejection.

One should note that not every e-filing rejection involves identity theft. On multiple occasions, I have experienced e-filing rejections when a young adult, often in college, filed their own income tax return unbeknownst to their parents. The parents’ transmission gets rejected due to claiming a dependent child who already claimed themselves. For high-income taxpayers, the dependent child provides zero tax benefit and only a modest state tax benefit. Upon removing the child as a dependent, recalculating the tax return and retransmitting, it typically ends up being accepted.

Another somewhat common e-filing rejection is when the spouse of a newly married couple uses her married name on the first jointly filed income tax return but has failed to change her last name from her maiden name with the Social Security Administration. Resubmission with the maiden name frequently solves that problem.

Alternatively, your client might receive correspondence from the IRS, usually from Austin, Texas, referencing their recently filed Form 1040 where it has yet to actually have been filed. Other telltale signs of tax return identity theft involve receiving an IRS transcript in the mail that was not requested or IRS correspondence pertaining to wages paid by an employer that the taxpayer never worked for.

STEP ONE When the e-filing rejection explanation is that either the taxpayer’s or spouse’s Social Security number was used on an electronically filed Form 1040 received by the IRS, you know that identity theft has occurred absent the unlikely circumstance where someone accidentally ended up using your client’s Social Security number. So now you have additional work to do in order for your client’s income tax returns to be filed.

When the federal income tax return rejects, the state income tax returns are halted as they are only transmitted once the federal income tax return is successfully e-filed. Typically, the first thing I do in this situation is to have the state income tax returns retransmitted by changing the input in my tax software to not transmit the federal income tax return. In almost every situation, the state income tax returns are successfully e-filed as the criminals usually only file phony federal income tax returns using a client’s Social Security number(s).

STEP TWO My next step is to generate IRS Form 8948, Preparer Explanation for Not Filing Electronically. That form asks for entry of the reject code provided by the tax software. In most instances, IRS Form 14039, Identity Theft Affidavit, will be generated. If the taxpayer has not already paper filed their Form 1040, the instructions for Form 14039 call for it to be attached to the back of the paper tax return. A paper copy of the entire Form 1040 needs to be printed as was commonplace before the advent of e-filing, to be signed manually by both the taxpayer and tax pretparer with attachment of W-2 forms and any 1099 forms where federal income tax was withheld.

Form 14039 alerts the IRS to the taxpayer being a victim of identity theft. It will lead to yearly issuance each January of a six-digit Identity Protection Personal Identification Number (IP PIN). This is somewhat of a two-edged sword as once issued an IP PIN,

one cannot e-file without entering it in the signature area. Omission of an IP PIN will cause an e-filing rejection. As the name denotes, it provides protection as presumably an identity thief would have no ability to possess a taxpayer’s IP PIN. The IP PIN changes each January.

NEW JERSEY AND NEW YORK If the taxpayer’s Form NJ-1040 cannot be e-filed due to identity theft, a Form NJ-1040-O, E File Opt-Out Request Form, is to be prepared and filed with the paper gross income tax return. The New Jersey Division of Taxation has a comparable form to Federal Form 14039, that being Form IDT-100, Identity Theft Declaration.

Likewise, the New York State Department of Taxation & Finance has Form DTF-275 with the same title. Both state taxing authorities request submission along with their identity theft declaration forms of a copy of the taxpayer’s driver’s license, passport, U.S. military card or other ID issued by a state or federal agency.

ADDITIONAL CONSIDERATIONS Beyond getting the taxpayer’s Form 1040 paper filed, the IRS website, irs.gov/ identitytheft, provides a substantial

amount of guidance to tax return identity theft victims. Various actions are suggested including filing a complaint with the Federal Trade Commission, contacting one of the three major credit bureaus (Equifax, Experian or TransUnion) to place a “fraud alert” on your credit records and the review of bank and credit card accounts for unauthorized transactions.

It is also conceivable that a taxpayer has experienced an event outside of the filing of their personal income tax returns that may warrant notifying the taxing authorities of concerns over tax return identity theft. This could include losing one’s wallet, having your home burglarized or falling victim to a variety of scams being perpetrated where the elderly are often preyed upon resulting in them divulging personal information over the phone to a complete stranger.

The IRS continually states that it does not initially contact taxpayers by telephone but rather does so via regular mail. Scammers will also resort to phishing emails where they attempt to trick the recipient into disclosing personal information such as passwords, bank account numbers, credit card numbers or Social Security numbers.

The message recipient may be asked to

click on a suspicious link or to download a malware file. Taxing authorities do not generally send email messages to taxpayers seeking information in order to approve requested refunds.

Neil B. Becourtney, CPA, is a tax director at Smolin, Lupin & Co., LLC. He is a member of the NJCPA and can be reached at neilbecourtney@smolin.com.

READ MORE TAX FRAUD AND TAX ID THEFT

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NEW JERSEY CPA | WINTER 2023/24

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YEAR-END PLANNING: STRATEGIES AND CONSIDERATIONS

By DARREN THOMAS, CPA, J.D., EA

TRAPHAGEN CPAs & WEALTH ADVISORS

While tax planning ideally should be an all-year undertaking, the last calendar quarter of the year is a great time to take advantage of some rapid-fire tax savings moves and to finalize an overall plan for saving on taxes before the year ends.

In developing a year-end tax plan, aside from tried-and-true tax planning strategies used every year, one must also consider recently passed legislation. The SECURE 2.0 Act brought many updates to the U.S. retirement system. Also, the Inflation Reduction Act boosted a number of energy tax credits for 2023.

The following are some 2023 tax planning strategies to consider: BUNCH ITEMIZED DEDUCTIONS If 2023 is looking like it could be a highincome year due to a promotion or large increase in income, the taxpayer should consider accelerating his or her deductions this year. This can include accelerating medical deductions, interest payments or charitable contributions or maximize pre-tax retirement contributions. This will allow the individual to reduce their tax liability considerably more than if they took the standard deduction.

HARVEST CAPITAL LOSSES Prior to year-end may be a good time for an individual to consider selling their worst-performing stock positions. This will allow them to offset any capital gains they generated for the year and, as well, take advantage of offsetting their ordinary income up to $3,000 ($1,500 if married filing separate). Any capital losses remaining can be carried forward to future tax years.

INVEST IN ENERGY EFFICIENT PROPERTY The Inflation Reduction Act resulted in a number of energy credits being improved for 2023. For example, the energy efficient

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home improvement credit replaced the nonbusiness energy property credit for 2023. It provides a credit of 30% of the costs of all eligible home improvements (e.g., roofs, insulation, windows, doors, air conditioners, water heater, heat pumps) made during the year, up to a $1,200 annual limit rather than a $500 lifetime maximum under prior law.

Also, the residential clean energy property credit allows a 30% credit for expenditures on certain solar, fuel cell, wind, geothermal and battery storage property, subject to applicable kilowatt restrictions.

CONSIDER A ROTH CONVERSION This strategy largely depends on the condition of the overall stock market. If the stock market is underperforming, it may be advantageous to convert a traditional IRA or 401(k) to a Roth IRA. When the stock market is down, plan portfolios are likely at a reduced value. Converting when a plan’s value is lower will allow the individual to convert a greater amount than he or she would normally be able to for the same cost. After conversion and paying the applicable tax costs that make the account an after-tax Roth IRA, it will be able to grow tax-free.

Roth accounts also have no required minimum distributions (RMD) and tax-free distributions after the age 59½. Even if the taxpayer does not convert to a Roth IRA in 2023, this is an effective strategy to keep in mind for the future.

DELAY REQUIRED MINIMUM DISTRIBUTIONS The SECURE 2.0 Act included increasing the age for RMDs. For those turning 72

after Dec. 31, 2022, the RMD age has increased from 72 to 73. Those who turn 72 in 2023 no longer have to take their initial RMD by April 1, 2024. Rather, their first RMD will be due for their 73rd year,

by April 1, 2025. Their 2025 RMD will also be required that same year. As such, consultation with a tax adviser may be needed to plan for this additional income.

Note that in 2033, the age requirement increases to 75.

INCREASE RETIREMENT CONTRIBUTIONS Retirement plan limits received an inflation adjustment increase in 2023. Individuals can now contribute up to $22,500 annually (up from $20,500 in 2022) to 401(k), 403(k), most 457 plans and Thrift Savings Plans. People 50 or older can contribute an additional $7,500 (up from $6,500 in 2022) in catch-up contributions.

The SIMPLE IRA contribution limit increased to $15,500 (up from $14,000 in 2022) with an additional $3,500 (up from $3,000 in 2022) available in catch-up contributions for people aged 50 and over.

Traditional and Roth IRAs also received an increase to $6,500 (up from $6,000 in 2022), but catch-up contributions to these IRAs remains at $1,000.

Simplified Employee Pension (SEP) IRA contribution limits have increased from $61,000 in 2022 to $66,000 in 2023.

Defined benefit plans also got a sizable jump, from $245,000 in 2022 to $265,000 in 2023.

CONSIDER SECTION 179 OR BONUS DEPRECIATION FOR BUSINESS ASSETS Section 179 allows a taxpayer to deduct the cost of purchasing eligible new or used assets. Examples include equipment, furniture, off-the-shelf computer software, qualified improvement property and certain personal property used predominantly to furnish lodging. The following improvements to nonresidential real property are also eligible: roofs, HVAC equipment, fire protection and alarm systems, and security systems.

For qualifying property placed in service in 2023, the expensing limit is $1,160,000.

The deduction begins to phase out dollar for dollar when asset acquisitions for the year exceed $2,890,000.

First-year bonus depreciation is available for qualified assets, which include new or used tangible property with a recovery period of 20 years or less (such as office furniture and equipment), off-the-shelf computer software and water utility property. For qualified assets placed in service through Dec. 31, 2023, bonus depreciation is 80%.

However, bonus depreciation is scheduled to be gradually reduced and eventually eliminated as follows: 60% for 2024; 40% for 2025; 20% for 2026; 0% for 2027 and future years. As such, those contemplating large capital purchases would be wise to accelerate placed-in-service dates to 2023 in order to take advantage of 20% additional bonus depreciation for 2023.

The strategies above can have broad applicability to most taxpayers. As tax practitioners are aware, facts and circumstances will vary by taxpayer. Careful consideration of a particular taxpayer’s situation is warranted before embarking on any suggested tax strategy. Finally, you must review and consider both the taxpayer’s current tax year and the following tax year to plan out the best strategies.

Darren Thomas, CPA, J.D., EA, is the tax director at Traphagen CPAs & Wealth Advisors. He is the leader of the NJCPA Federal Taxation Interest Group and can be reached at darren@tfgllc.com.

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Dec. 21 and additional dates, Live Webinar INDIVIDUAL AND FINANCIAL PLANNING TAX CAMP

Dec. 28 and additional dates, Live Webinar RETIREMENT PLANNING: IRAs

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NEW JERSEY CPA | WINTER 2023/24

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ESG: POSITIONING A COMPANY FOR SUCCESS

By JOHN W. CITTI, CPA, CTP

A February 2023 survey by Ernst & Young of 500 C-suite executives at Fortune 1,000 companies found that 87% consider ESG very or extremely important to their organization. The Business of Sustainability Index found 69% of consumers say environmental impact is important in purchasing decisions.

Here’s a look at ways CPAs can position their company or their clients for ESG at the state, national and corporate levels.

With recent anti-ESG (environmental, social and governance) legislative efforts in many states and backlash against diversity programs, one might think the ESG movement is losing steam.

However, a closer look tells a different story.

NEW JERSEY The Regional Greenhouse Gas Initiative (RGGI) is a cap-and-trade program covering 11 northeastern states that has reduced the region’s power sector CO2 emissions by 50% since implementation in 2008. In July 2023, Governor Phil Murphy’s administration released its plan for investing New Jersey’s RGGI funds for the 2023-2025 period.

The plan directs 41% of funding to decarbonize buildings, 49% to transition the state’s transportation system to electric power and 10% to improve forests and coastal areas. And it focuses on lower-income and minority communities that have disproportionately suffered environmental harm.

Municipalities, for-profits and nonprofits can obtain funding for electric vehicles and charging stations, sequestering carbon, reducing building emissions, as well as enhancing urban forest canopy, water quality, coastal habitats and other projects.

Information is available at dep.nj.gov.

IMPACTING NONPROFITS LLC

NATIONAL Swedish activist Greta Thunberg is not the only young person championing the environment. High school students in Montana won a landmark lawsuit this summer against Montana by arguing the state’s support of the fossil fuel industry

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violated their constitutional right to a clean and healthful environment. Harvard Law professor Richard Lazarus says the ruling’s full impact is not known yet, but it’s the first time a U.S. court has ruled against a government for violating a constitutional right based on climate change. The ruling could influence the growing number of environmental lawsuits around the country.

Perhaps the starkest example of the country’s political division is the divergent ESG policies by red and blue states. Several blue states, including New Jersey, have introduced or passed legislation to enhance board diversity and divest state pension funds from fossil fuel and firearms companies.

Conversely, many red states prohibit their state government from doing business with financial institutions that integrate ESG into their business decisions or avoid fossil fuel or firearms companies. National companies are left wondering what to do.

The law firm Ropes & Gray advises financial institutions to avoid overstating or understating how ESG factors into their business decisions. Companies should monitor developments in states and ensure their written policies and marketing documents do not violate new anti-ESG rules.

The Securities and Exchange Commission (SEC) is expected to release its final required climate-related disclosure rules by the end of 2023. The reporting burden is on public companies, but since SEC-regulated companies may be required to report their upstream and downstream impact, the rules can affect private companies in a public company’s supply chain.

While ESG initiatives and reporting are significant burdens to clients, they are also an opportunity for sales, recruitment and expense savings. For example, the Business of Sustainability Index found that 66% of consumers would pay more for

These loans prove lender and borrower commitments to the environment, earning goodwill from stakeholders. Borrowers receive the added benefit of lower interest expense if metrics are met. Risks exist as well: both sides can be accused of “greenwashing” (inaccurate claims of positive environmental impact) if the metrics are not aggressive enough, which can damage reputations and trigger stakeholder litigation and regulatory scrutiny. The SEC is particularly keen on investigating potential greenwashing.

CPAs can advise their company or clients of the pros and cons of these facilities and structure appropriate metrics.

As companies position their organizations to meet the challenges and opportunities presented by ESG, they need assistance with regulatory compliance, capital allocation, risk management, projections and financing — all within the CPA skill set.

sustainable products. Benevity reports that 95% of job seekers compare employer diversity efforts and consulting firm McKinsey & Co. found that strong ESG policies can significantly reduce operating expenses.

CORPORATIONS As companies commit to ambitious ESG targets, they wrestle with how best to manage initiatives and reporting. EY reports that 86% of companies surveyed assigned oversight to the board along with delegating responsibility to existing board committees and creating a new ESG committee. Over half of S&P 500 companies use ESG metrics in their executive compensation plans and many integrate ESG into their strategic plans. CPAs can guide their company or clients to the best governance structure for their culture and business.

After the murder of George Floyd, a Black man in Minneapolis, chief diversity officer positions grew by 169% from 2019 to 2022 as employers built their diversity programs. However, ABC News reports a reversal, as one in three diversity, equity and inclusion (DEI) professionals lost their job in 2022. Global leadership consulting firm

DDI found that companies lacking DEI programs are up 33%.

Does this mean employers are pulling back from their DEI goals? Gene Marks, a speaker at the NJCPA Annual Convention & Expo, wrote in The Hill that employers are no less committed to diversity. Instead, they are determining the best size and structure for their programs.

Surveys validate this view. The EY survey cited above found that 87% of executives support a diverse workforce. The University of North Carolina at Pembroke reports that gender-diverse teams outperform others by up to 50%.

When it comes to financing, Green Bonds and Sustainability Linked Loans (SLL) have become popular tools in recent years. While proceeds from Green Bonds are invested in environmental or sustainability projects, SLL proceeds can be used for general corporate purposes if one or more key performance metrics relate to sustainability performance targets. Failure to meet targets does not trigger a default but can result in higher interest rates. Some loan agreements reduce the interest rate if targets are met.

John W. Citti, CPA, CTP, is the managing member of Impacting Nonprofits LLC. He is a member of the NJCPA Nonprofit Interest Group and can be reached at john@impactingnonprofits.com.

READ MORE ESG KNOWLEDGE HUB

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Dec. 22 and additional dates, Live Webinar ACCOUNTING & AUDITING FOR ESG

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Jan. 15 and additional dates, Live Webinar THE IMPACT OF ESG MATTERS ON FINANCIAL REPORTING AND AUDITS

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NEW JERSEY CPA | WINTER 2023/24

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ACCOUNTING, AUDITING & ATTEST

Crypto Attestation Updates and Trends

BY DR. SEAN STEIN SMITH, CPA, DBA, CMA, CGMA, CFE, CITY UNIVERSITY OF NEW YORK — LEHMAN COLLEGE

As the FTX trial got underway in October 2023, with all of the headlines and stories that it pushed to the front page, one question also returned to the conversation: How exactly did this happen? And because FTX had audit engagements with two firms — Armanino and Prager Metis — as well as employed two of the Big 4 to perform various accounting and tax services, the question becomes even more pointed.

The fallout for both audit firms has been severe, with Armanino having exited the blockchain audit business altogether and Prager Metis currently being sued by the Securities and Exchange Commission (SEC) due to involvement with the FTX audit. In addition, the Office of the Chief Accountant at the SEC issued what has been construed by some practitioners as a warning against offering audit and attest services to crypto firms.

Coupled with the decline in market prices for cryptoassets at large, including recent opinions that 95% of the nonfungible token (NFT) market is worthless, the outlook for crypto attestation might seem bleak. On the other hand, there are multiple stories and trends that offer a more optimistic outlook, both for the space at large and for more consistent and applicable auditing standards. Several of the largest financial institutions in the world, including Blackrock, JP Morgan and Citi, have all recently filed for certain crypto products to be approved, expanded existing blockchain and tokenization offerings, or launched tokenized payment options for clients. In addition to these developments, there has been beneficial news on the accounting front as well with the Financial Accounting Standards Board (FASB) preparing to pass the first cryptospecific accounting codification by the end of 2023.

With all of that in the marketplace, there are two specific things that practitioners seeking to provide audit and attestation services to clients in the crypto space, now or in the future, need to keep in mind as the conversation continues to progress.

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STABLECOINS WILL DRIVE ATTESTATION IMPROVEMENT As noted above, there are multiple large financial institutions investing heavily in developing and launching blockchain and cryptoassets, so this clearly means that the market expectation will be for more transparent and real-time accounting data.

This is not to mention the developments at PayPal, namely the creation and issuance of a stablecoin (PYUSD) that is available to more than 400 million customers worldwide. A stablecoin issued and backed by a payment processor that has household name recognition is almost guaranteed to increase the ubiquity of stablecoin transactions in the marketplace.

Additionally, stablecoin transaction volume exceeded that of Mastercard and PayPal in 2022, which also is a clear sign that crypto transactions are here to stay.

Lastly, with the Gen Z cohort expressing substantial interest in receiving at least a portion of salary in crypto, the volume of crypto transactions (even if Bitcoin remains relatively subdued) looks set to continuously increase over the coming years.

With this increase in transactions, the need and expectation for real-time and accurate attestation will also grow; practitioners are well situated to take advantage of these trends.

CONTROLS WILL PLAY A LARGE ROLE IN ATTESTATION Although the distinction between audits and attestation engagements are important to keep in mind, internal controls and the control environment are crucial to all work related to establishing the accuracy of accounting data. As cryptoasset transactions continue to increase in both volume and number of potential users, here are a few things that practitioners should keep in mind: y Wallet management: Hot wallets and cold wallets might seem like rudimentary areas to focus on for experienced users, but with new users, these are topics

worth revisiting both in terms of client education as well as cybersecurity considerations. y Multi-signature access: One control that can help prevent misappropriation of assets is a multi-sig wallet, requiring multiple individuals within a firm to mutually authorize large crypto payments. y Exchange to payment mapping: One common pain point in the crypto accounting space is the mapping of exchange balances and transactions into existing accounting ERP systems. This is often where errors, mislabeling and the potential for theft are highest.

Practitioners would be well advised to keep all of these factors in mind when either educating themselves about crypto attestation or seeking to engage with clients on these issues.

Dr. Sean Stein Smith, CPA, DBA, CMA, CGMA, CFE, is a professor at the City University of New York — Lehman College. He is a member of the NJCPA Board of Trustees, participates on several interest groups and can be reached at sean.steinsmith@lehman.cuny.edu.

READ MORE CRYPTOCURRENCY AND DIGITAL ASSETS KNOWLEDGE HUB

njcpa.org/hub/crypto

LEARN MORE Sean will be presenting a cryptocurrency update at the following events: JAN. 9, PATERSON, PASSAIC COUNTY CHAPTER EVENT JAN. 12, LIVE WEBCAST (REPLAY ON JAN. 19)

njcpa.org/events

BUSINESS MANAGEMENT

SPONSORED CONTENT

How to Set Up a 401(k) Plan for Small-Business Employees A 401(k) plan is among the best ways to help a business attract and retain quality talent. Tax benefits and owner retirement savings options also make starting a 401(k) plan a smart idea.

Employers should decide what they wish to contribute and consider the tax savings involved. With an employer match, a business can invest in its workforce and positively impact employee morale and retention.

Employees can contribute as much as they like, within IRS limitations. Encouraging employees to increase their 401(k) participation could result in happier, lessstressed employees who are more engaged and productive.

BENEFITS y A 401(k) can make a business more competitive in attracting and retaining top talent. y A business might be eligible for retirement plan tax credits when it starts a new plan. y Under the SECURE 2.0 Act, an employer contribution credit is available for eligible businesses. y Some plan expenses and contributions are also tax-deductible. y Payroll integration and administration make setting up and maintaining a retirement plan more affordable.

HOW TO SET UP A PLAN First, research retirement options for the business. Look for firms that provide recordkeeping and third-party administration services. Focus on providers that can serve owners/managers and employees long-term with extensive resources and excellent customer service.

Next, choose a plan for employees.

Options include the following: y A traditional 401(k) plan is the most flexible. Employers can make contributions for all participants, match employees’ deferrals, do both or neither. y The safe harbor 401(k) plan requires the company to make a mandatory contribution to the plan. The contributions benefit the company, the business owner and employees by giving them greater ability to maximize salary deferrals.

y With an automatic enrollment 401(k) plan, you enroll employees and place deductions from their salaries in certain default investments unless employees elect otherwise. Automatic enrollment plans may contain a safe harbor provision.

Setting up a 401(k) includes some crucial steps, some of which may be handled by your provider. The U.S. Department of Labor provides in-depth details of the process, a summary of which includes the following: y Create a 401(k) plan document that complies with IRS Code and outlines the details of your retirement plan.

Then ensure the document is followed. y Set up a trust to hold the plan assets to assure they are used solely to benefit the participants and their beneficiaries. y Maintain accurate records of 401(k) employee contributions and values.

Many small businesses work with a 401(k) recordkeeper to help them manage plan setup and ongoing record management. y Provide information to plan participants. It’s important to provide information about plan benefits, rights, features, etc. A disclosure form can help ensure your communications follow IRS requirements.

ADMINISTRATION AND MAINTENANCE Establishing a 401(k) can be straightforward.

Businesses should do preliminary research and allow ample time to create a plan document, establish a trust, notify employees and launch the new benefit.

Costs to set up a 401(k) plan will depend on the size of the business and the benefits selected. Other costs include fees for rolling assets over from another plan and initial costs for investment advice.

Once established, there will be ongoing 401(k) administrative fees and costs for day-to-day operations, investment fees and individual service fees. Employers should seek to avoid potential fees or penalties associated with being non-compliant with 401(k) reporting. Using a knowledgeable retirement services provider can help ensure compliance with retirement plan forms, deadlines and notifications.

Find a provider with an excellent track record to get the 401(k) started, manage the plan and share ideas on how to maximize the value to the company and its employees.

It can provide an ongoing, positive benefit for years to come.

Paychex is an NJCPA member benefit provider. Learn more at paychex.com/ accounting-professionals.

NEW JERSEY CPA | WINTER 2023/24

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BUSINESS MANAGEMENT

SPONSORED CONTENT

The Bewildering World of Cash Discounts and Surcharging

BY ERIC COHEN, MERCHANT ADVOCATE

To compound the confusion, the tax implications are also a bit fuzzy. Companies must let their merchant acquirer and relevant card networks know they are planning to start a surcharge program — and they will need 1099K paperwork from their processor come tax season. If the money accrued from surcharging isn’t reported correctly, there’s a good chance it will come up as a red flag. The nuances become even hazier if a New Jersey-based company does out-of-state business or has locations in other states.

Credit card surcharging and the related programs have been a hot topic over the last few years and are only growing hotter.

Some see the practice as a way of offsetting the cost of doing business with credit cards, while others consider it an undue toll levied on loyal customers and clients.

The guidelines and laws surrounding these programs are unclear, ever-changing and vary by state and area.

TRADITIONAL SURCHARGE PROGRAM A traditional surcharge program adds a fee to all credit card transactions — excluding debit. The first challenge here is how to distinguish debit from credit. Some businesses assume that a debit card is any card processed with a personal identification number (PIN). That is not the case. PIN or not, a debit card is any card that takes money directly from a consumer’s bank account. This represents around 50% of all transactions.

The consumer may tell the merchant to run their debit card “as a credit card” without the PIN — regardless, it’s debit and illegal to surcharge under the Durbin Act. The only way to run a true surcharge-compliant program is to use a credit card machine or point of sale system that determines if the card is debit or credit before applying the fee. To complicate the issue further, some industries are tied to specific point of sale

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(POS) systems that do not have this ability.

This is particularly true for those in the restaurant and hospitality sectors.

CASH DISCOUNT PROGRAM Cash discount programs were originally designed as a way for processors to creatively add a service fee to all card transactions and then offer a discount for those paying by cash. Essentially, they changed the name of the program from “surcharge” to “cash discount” and added a fee, just to take the fee off. This is really a surcharge program in different packaging, which means it’s also illegal to offer a cash discount on a debit card. A true compliant cash discount program lists the actual price and takes a discount off the listed price if the customer pays with cash.

COMPLIANCE REGULATIONS A new law regarding surcharging just went on the books in New Jersey. It restricts surcharge fees to an amount equal to the actual processing cost and requires businesses to provide notice if they are imposing surcharges. Anyone who is non-compliant can face an initial fine of up to $10,000.

But what’s been done to ensure merchants are complying with these regulations? As it turns out, not a whole lot. While Visa and Mastercard can monitor and issue fines — which is happening more and more — no one else is actively policing the space.

BEST PRACTICES The safest way for a merchant to participate in a surcharge program is to use a true cash discount. There is zero need to involve a processor, and all a business needs to implement a true cash discount program is a well-priced merchant account.

It is vital to become more familiar with monthly statements — particularly potential hidden or junk fees — and use these data points to negotiate lower fees. This can happen through more vigilant auditing on a company’s part or working with an expert who can help decipher these confusing statements.

Eric Cohen is CEO of Merchant Advocate, financial consultants that help merchants save money from the credit card industry. He can be reached at ecohen@merchantadvocate.com.

Merchant Advocate, an NJCPA member benefit provider, has saved their clients (including the NJCPA) more than $250 million in excess processing fees. Contact them to receive a free analysis of your merchant account: merchantadvocate.com/NJCPA.

FIRM MANAGEMENT

Evolving Accounting Firm Culture

BY RACHEL ANEVSKI, MAOB, PHR, SHRM-CP, MATTERS OF MANAGEMENT, AND JESSICA L. LEVIN, MBA, CMP, CAE, DES, DBA, SEVEN DEGREES, LLC

In the fast-paced and competitive world of accounting, attracting and retaining talented professionals is essential for the growth and success of firms. While factors such as salary and career advancement opportunities are crucial, the significance of a strong firm culture should not be underestimated. Accounting firms must recognize their employees’ evolving needs and expectations and proactively work to create an environment that fosters engagement, collaboration and a sense of belonging.

A firm’s culture encompasses its values, norms and behaviors. It sets the tone for how employees interact, collaborate and feel connected to the organization. A positive firm culture can drive employee satisfaction, productivity and loyalty, while a toxic or stagnant culture can lead to high turnover rates and a negative reputation.

TRENDS IN ACCOUNTING FIRM CULTURE y Defining and communicating values: Articulating the firm’s values and mission helps candidates and existing staff understand what the organization stands for. Placing emphasis on integrity, client service, innovation and work-life balance can attract individuals who resonate with these values. Don’t simply copy these — take the time to dig deep into who you are and why you are different. y Offering post-pandemic work-life balance options: One of the biggest trends in accounting firm culture is the focus on work-life balance. Firms are offering more flexible work arrangements, such as remote work, hybrid work schedules, reduced schedules and unlimited PTO. This helps employees maintain a healthy work-life balance and reduces burnout and turnover rates. y Having diversity, equity, inclusion and accessibility: Diversity is more than race and gender. Inclusive cultures foster creativity, different perspectives

and a sense of belonging. One of the challenges within this area used to be locality. Before the pandemic, it was challenging to recruit diverse staff primarily because of the location and proximity to work. Now that firms are working remotely/hybrid, access to national and international talent has widened the opportunity to embrace differences. Furthermore, as we continue to grow in this area of firm culture, neurodivergent talent becomes an underrepresented possibility. Cultureforward firms highlight efforts to create a diverse and inclusive workplace, leveraging affinity groups, diversity training and policies that support worklife integration. y Investing in professional development: Forward-thinking firms also invest heavily in their employee’s professional development, specifically in leadership and soft skills. This includes offering mentoring programs, executive coaching, leadership certification programs and opportunities for advancement within the organization. Demonstrating a commitment to nurturing employees’ skills and providing them with avenues for advancement can be a strong selling point for candidates seeking long-term careers. If this doesn’t fit the description of your culture, consider why and what you need to do to make employees feel valued. y Integrating technology: With the rise of digitalization, accounting firms are embracing technological advancements to streamline processes and improve efficiency. Investing in cloud-based software, automation tools and AI-powered solutions helps to enhance accuracy and productivity. While AI advancements are yet to replace full-time accountants, looking at alternative hires who can easily assimilate to the technologies required to power the industry is a wise investment.

y Promoting wellness: Public accounting firms should prioritize employee wellness and mental health by providing resources such as counseling services, yoga classes and meditation rooms to help employees manage stress and maintain good mental health. At-home wellness solutions may include nutritional counseling, health and awareness programs, and online exercise programs. Taking it a step further, advanced cultures recognize national and global trends, such as the advanced rate of divorce post-pandemic, and offer divorce coaching, mediation support and family counseling.

As accounting firms navigate an increasingly competitive landscape, the role of firm culture in recruiting and retaining top talent must be considered. To attract the best candidates and retain skilled professionals, firms must actively cultivate a positive, inclusive and supportive environment by clearly defining and communicating their values, offering opportunities for growth and work-life balance, and fostering collaboration and diversity.

Rachel Anevski, MAOB, PHR, SHRM-CP, is the CEO and founder of Matters of Management, LLC. She can be reached at rachelanevski@gmail.com.

Jessica L. Levin, MBA, CMP, CAE, DES, DBA, is the president and chief connector at Seven Degrees, LLC. She can be reached at jessica@ sevendegrees.com.

READ MORE FIRM MANAGEMENT KNOWLEDGE HUB

njcpa.org/hub/ firmmanagement

WATCH MORE CULTURE IS KEY TO ACCOUNTING FIRM SUCCESS

youtu.be/XSUoz2bLb8w

NEW JERSEY CPA | WINTER 2023/24

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FIRM MANAGEMENT

Engagement Letter Provisions in a Dynamic and Rapidly Changing Profession

BY JOHN F. RASPANTE, CPA, MST, CDFA, MCGOWAN PRO AND ANTHONY CANDELA, CPA, MST, CANDELA AND ASSOCIATES, LLC

As the accounting profession undergoes dynamic and rapid changes, engagement letter clauses must spell out any additional services and how any increased risk will be managed. The letters need to include such clauses with a brief reason(s) for their use and the resulting benefit(s). The clauses below represent some of the areas of practice that contribute to heightened claim exposure.

CANNABIS Still in the growth stage, the cannabis industry is causing claim exposure in both tax preparation and financial statement preparation. The tax exposure results from the difference in tax treatment for state and federal purposes. Financial statement concerns have centered on disclosure requirements including, but not limited to, risks and uncertainties and compliance with laws and regulations. y Download sample engagement letter language at bit.ly/EngagementLetterText.

PASS-THROUGH ENTITY TAX As of the writing of this article, 30 states and one locality have enacted a passthrough entity (PTET) tax since the Tax Cuts and Jobs Act state and local tax (SALT) cap was first put into place. Claims have included failure to make a timely election, failure to advise clients of the benefit of a PTET, and application of the PTET to non-resident shareholders, members and partners. y Download sample engagement letter language at bit.ly/EngagementLetterText.

FORCE MAJEURE The following clauses were seldom used prior to the COVID-19 pandemic. These clauses are now strongly recommended and, unlike many engagement clauses, they have been met with little client resistance.

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y Termination language — Our engagement may be terminated at will by either party upon thirty (30) days written notice, but may be terminated immediately upon written notice for your non-payment of our invoiced fees and costs; your inability or unwillingness to fulfill your obligations to us as described above, including the provision of documents or other information in a timely fashion; or if, in the sole discretion of the terminating party, any continuation of the engagement would be contrary to law or professional standards, or otherwise harmful or improper. y Force majeure language — Neither party shall be held liable or responsible to the other party nor be deemed to have defaulted under or breached this Agreement for failure or delay in fulfilling or performing any obligation under this Agreement when such failure or delay is caused by or results from causes beyond the reasonable control of the affected party, including but not limited to fire, floods, embargoes, war, acts of war, insurrections, riots, strikes, lockouts or other labor disturbances, or acts of God; provided, however, that the party so affected shall use reasonable commercial efforts to avoid or remove such causes of nonperformance, and shall continue performance hereunder with r

easonable dispatch whenever such causes are removed. Either party shall provide the other party with prompt written notice of any delay or failure to perform that occurs by reason of force majeure.

WAYFAIR/NEXUS Though it is not a new clause, the clause below has helped with both claims defense and sorting out client confusion on the scope of the CPA’s responsibility with the passage of the Wayfair Act: From information you provide to us, our firm will prepare [INSERT YEAR] federal and state corporation/partnership income tax return(s) for the state(s) of: [INSERT SPECIFIC STATE(S)’ NAMES]. This firm is responsible for preparing only the returns listed in the preceding sentence. Please note that if your corporation/partnership has an income tax filing requirement in a given state but does not file the required income tax return, it is possible that the nonfiling could have adverse ramifications including (i) an unlimited assessment statute of limitations and (ii) inability to claim net operating losses or other tax attributes on any future years’ income tax returns.

If your business has any operations in states other than those specifically listed, you are responsible for providing our firm all information necessary to prepare any

FIRM MANAGEMENT

additional applicable state(s) income tax returns such as the identity of all states in which XYZ Corporation/Partnership does business and the extent of business operations in each relevant state. Any additional state income tax returns prepared will be done as a separate engagement.

Alternatively, under a separate engagement, using gross sales, payroll and other data provided by you, our firm can perform an investigation to determine each state where the XYZ Corporation/Partnership has an income tax return filing requirement.

Please inform our firm if you would like to have such an investigation performed.

INCREASED TAX ENFORCEMENT AND COMPLIANCE With the creation of the Inflation Reduction Act, there is no doubt that tax examinations will increase. History has shown that when IRS tax examinations increase, there is a corresponding increase in professional liability claims plaguing CPAs. The clause below is one of many clauses risk management professionals have been advocating to limit this peril: We will provide you with questionnaires and work sheets to guide you in organizing the information we need to prepare your tax returns. You represent that the information you are supplying to us is accurate and complete to the best of your knowledge. We will not verify the information you give us.

Unless you specifically indicate the portion of any business expenses as personal, we will treat all such expenses as business deductions.

If any expenses are disallowed by the taxing authorities, you will hold us harmless from any damages assessed by the taxing authorities.

However, we may ask for clarification of some of the information. Any information we receive from you will be treated as confidential and is subject to disclosure by us only at your request or as compelled by law or for regulatory matters. However, we may be required to disclose your confidential information to an outside service bureau that assists us in providing tax preparation services.

DIGITAL CURRENCY For clients involved with digital currency, the following should be used:

You are responsible for informing us, in writing, of any holdings of/transactions in virtual currency (i.e., cryptocurrency or any other digital representation of value) at any time during the tax year, as these are subject to taxation and reporting may be required (see Notice 2014-21, irs.gov/pub/ irs-drop/n-14-21.pdf.). If you do not do so, your tax return may be incorrect, and tax, interest, penalties, and other assessments may imposed, for which we have no responsibility.

Because the Internal Revenue Code requires taxpayers to maintain records sufficient to establish positions taken on tax returns, you should maintain records documenting receipts, sales, exchanges, or other dispositions of virtual currency, and the fair market value of the virtual currency. Because tax law related to virtual currency is new/evolving/ unclear, any recommended tax treatment will be based on interpretation of the guidance available at the time of consultation, and there is an inherent risk that future revisions may be needed, resulting in additional tax, interest, penalties, and other assessments, for which we will not be responsible.

OUTSOURCING For firms that outsource client work, the following clause can be included: We may, from time to time, and depending on the circumstances, use third-party service providers to assist in preparing your return, but these preparers will not make substantive decisions concerning your return. We may share your tax return information with these service providers, but remain committed to maintaining the confidentiality and security of your information. Accordingly, we maintain internal policies, procedures and safeguards to protect the confidentiality of your personal information. In addition, we will secure confidentiality agreements with all service providers to maintain the confidentiality of your information and we will take reasonable precautions to determine that they have appropriate procedures in place to prevent the unauthorized release of your confidential information to others.

In the event that we are unable to secure an appropriate confidentiality agreement, you will be asked to provide your consent prior to the sharing of your confidential informa-

tion with the third-party service provider.

Furthermore, we will remain responsible for the work provided by any such third-party service providers.

CYBERSECURITY FOR REMOTE WORK Regarding remote work, the following can be used: In connection with this engagement, we may communicate with you or others via email transmission, and by signing this letter, you authorize us to do so. As emails can be intercepted and read, disclosed, or otherwise used or communicated by an unintended third party, or may not be delivered to each of the parties to whom they are directed and only to such parties, we cannot guarantee or warrant that emails from us will be properly delivered and read only by the addressee.

Therefore, we specifically disclaim and waive any liability or responsibility whatsoever for interception or unintentional disclosure of emails transmitted by us in connection with the performance of this engagement. In that regard, you agree that we shall have no liability for any loss or damage to any person or entity resulting from the use of email transmissions, including any consequential, incidental, direct, indirect, or special damages, such as loss of revenues or anticipated profits, or disclosure or communication of confidential or proprietary information.

John F. Raspante, CPA, MST, CDFA, is director of Risk Management for McGowanPro. He is a member of the NJCPA Accounting & Auditing Standards Interest Group and can be reached at jraspante@mcgowanprofessional.com. Anthony Candela, CPA, MST, is the managing member of Candela and Associates, LLC, and can be reached at info@c-allc.com.

Access an electronic version of the article to copy and paste clause language at bit.ly/EngagementLetterText.

NEW JERSEY CPA | WINTER 2023/24

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INDUSTRIES

Giving Tech and Biotech Startups a Leg Up

BY VAGIF ISAKHANLI, CPA, MBA, MST, RRBB ADVISORS, LLC

Startups, especially tech and biotech startups, are common these days. Most of these companies do not have enough resources, such as tax departments, at the beginning of their lifecycle. They will come to their CPAs for advice. CPAs can suggest proper accounting and bill payment systems and discuss tax implications of various entity types and transactions. Below are some of the common tax issues startups can face.

ENTITY TYPE Questions often arise related to the type of entity created: should it be a partnership, S corporation or C corporation? Most tech and biotech startups are created as C corporations due to the ease of raising money, various payroll and health benefits, and section 1202 and 1244 issues, which relate to exclusions of gains from certain small business stock sales and deductions from losses from stock sales, respectively.

TAX DEDUCTIONS Start-up costs are deductible up to $5,000, but if the total exceeds $50,000, the $5,000 immediate deductions will be reduced.

Start-up costs and organizational costs will be capitalized and deducted over 180 months. Failure to capitalize start-up costs will result in denial of any start-up deduction at all for those costs.

Some new laws will need to be explained to the owners, such as Section 174, which requires capitalization and amortization of

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research and development costs over five years for services performed in the U.S. and 15 years for foreign research. If the CPA firm has an R&D specialist in house (or they can refer one), the company should talk about federal and or state research credits, especially if they can use these credits against payroll tax. The Inflation Reduction Act expanded the R&D tax credit, which provides payroll tax reductions for start-up businesses, and doubled the maximum amount that can be applied to offset employer payroll taxes from $250,000 to $500,000 for eligible small businesses.

Businesses might be surprised by the interest expense deduction limitation rules for 163(j) or related-party interest rules.

Stock buybacks during the lifecycle of the business can be subject to a new 1% excise tax, unless small buybacks and other exceptions apply. The company may need to issue SAFE (Simple Agreement for Future Equity) notes, which would raise the issue of tax classification. If these are traditional SAFE notes, they may be classified as prepaid forward contracts.

CPAs should advise owners of these companies what the difference is between stock or debt investing in a company and how they can get short-term capital loss on these investments or Section 1244 losses — and what the requirements are for each.

This will come into play if the company suffers losses for the first few years and the owners would like to harvest those losses in the most tax-efficient ways.

On another hand, if a company becomes successful and profitable, tax professionals should be thinking about the Section 1202 exclusion on capital gains income as a way to exit the company. International expansions will create withholding obligations on some types of payments, special tax forms to file for transfer of property to foreign corporations, foreign bank accounts forms, how those operations will be classified for U.S. tax purposes and whether there is any tax treaty with that foreign country. The CPA will need to

examine the tax reporting obligations for foreign investors or any withholdings for any payments made to them.

Even domestically, most companies don’t know that if they register for payroll tax purposes in most states, it’s a best practice to register there for income taxes also and get ID numbers not only for the federal tax return, but also for each state where they might have filing obligations.

Otherwise, the company could be buried with tax notices from each state in which they have filing obligations.

ADDITIONAL GUIDANCE CPAs should be prepared to provide the following guidance, which will demonstrate that they are not only the income tax advisor, but also a value-added business partner. y The tax implications of hiring remote workers all over the country or even overseas y Situations that would create a nexus and filing obligation in any state as well as any foreign reporting requirements y The sales tax implications in various states and how the company can get a sales tax exemption in a particular state for resellers y The best payroll service for the client y How the company should handle stock or option awards to employees Startups can have a lot of tax- and non-tax-related domestic and international issues. CPA have the opportunity to provide value and become their trusted business advisor.

Vagif Isakhanli, CPA, MBA, MST, is a managing director at RRBB Advisors, LLC. He is a member of the NJCPA and can be reached at visakhanli@ rrbb.com.

LITIGATION SERVICES & BUSINESS VALUATION

Considerations When Providing Valuation Services in Litigation and Investigations

BY JEFFREY BARESCIANO, CPA/CFF/ABV, CVA, MERCADIEN

Litigation and investigative engagements often focus on economic damages claimed by the plaintiff where a valuation practitioner is retained to determine the value (or decline in value) of a business or the loss in profits resulting from an alleged wrongful act. Typical examples of engagements include breach of contract, divorce, bankruptcy and shareholder disputes.

Valuation practitioners involved in these dispute scenarios encounter legal and regulatory environments in addition to the general standards set forth by professional organizations. Accordingly, a valuation practitioner’s understanding of relevant court rules, procedures and techniques (and when to employ them) are key considerations when delivering these services.

AICPA STANDARDS IN LITIGATION AND INVESTIGATIONS A sound understanding of governing professional standards is a critical foundation for a valuation practitioner. In dispute scenarios, an AICPA member who performs any valuation service is subject to the AICPA’s Statement on Standards for Valuation Services No. 1 (SSVS 1) in addition to its Statement on Standards for Forensic Services No. 1 (SSFS 1).

SSFS 1 applies when the valuation services being provided are part of a “litigation” or an “investigation” engagement as defined below. y Litigation: An actual or potential legal or regulatory proceeding before a trier of fact or a regulatory body as an expert witness, consultant, neutral, mediator or arbitrator in connection with the resolution of disputes between parties.

The term litigation as used herein is not limited to formal litigation but is inclusive of disputes and all forms of alternative dispute resolution. y Investigation: A matter conducted in response to specific concerns of

wrongdoing in which the member is engaged to perform procedures to collect, analyze, evaluate or interpret certain evidential matter to assist the stakeholders (e.g., client, board of directors, independent auditor or regulator) in reaching a conclusion on the merits of the concerns.

An AICPA member performing forensic services must follow these additional general standards regarding integrity, objectivity, understanding and communication with the client (commonly through an attorney), which are promulgated to address the distinctive nature of such services.

CONFLICTS OF INTEREST, DISCLOSURES AND WAIVERS The AICPA’s Code of Professional Conduct provides guidance on the identification and disclosure of conflicts of interests.

The practitioner will need to reasonably conclude whether independence, integrity, objectivity and professional skepticism are compromised in fact, or would be perceived by a reasonable and informed third party. Depending on the situation, a practitioner may need to disclose a conflict of interest and obtain informed consent as well as an engagement letter appropriately identifying the scope of work, along with a written waiver of conflicts of interest from all parties.

TYPE OF ENGAGEMENTS AND CONFIDENTIALITY A practitioner may be approached to serve as a consultant for an attorney or as an expert witness.

As a consultant, expert testimony may not be required and workpapers may be subject to attorney-client privilege. In such a scenario, a practitioner may be involved in assisting with negotiations or the review of settlement agreements.

When engaged as an expert witness, a practitioner should be prepared to testify

to their understanding of the case, the data and methods utilized to arrive at opinions.

Early in the relationship, the practitioner and client should come to an understanding about whether a consulting engagement has the potential to develop into an expert witness engagement, whether the practitioner is agreeable to such a change in scope, and what reports and workpapers may be subject to discovery by the other side.

APPLICABLE STANDARD OF VALUE The standard of value, or the type of value being utilized, differs across jurisdictions and may differ from definitions established in the Internal Revenue Code or Generally Accepted Accounting Principles (GAAP).

The applicable standard of value will affect the valuation procedures and determine whether certain adjustments are to be applied, such as discounts for marketability and control.

Fair value, a basis of value imposed by a third party (e.g., by law, regulation, contract), is commonly the standard of value in litigation matters. In determining the appropriate fair value that will be accepted by the court, a practitioner should work with the attorney to become knowledgeable about the applicable statutes and case law.

In the complex litigation and investigative environment, a practitioner’s knowledge and adherence to applicable legal, regulatory and professional standards begins with the assessment and acceptance of an engagement and continues throughout the completion of the valuation process.

Jeffrey B. Baresciano, CPA, CFF, ABV, CVA, is a director at Mercadien. He is a member of the NJCPA and can be reached at jbaresciano@mercadien.com.

READ MORE LITIGATION SERVICES KNOWLEDGE HUB

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NEW JERSEY CPA | WINTER 2023/24

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PROFESSIONAL DEVELOPMENT

Building Your Personal Brand

BY NICOLE M. DeROSA, CPA, MAcc, WISS

In high-performing organizations, everyone is typically exceptional. To clearly differentiate yourself and your brand, you need to do more than just have a good reputation and be good at your job.

BRAND VERSUS REPUTATION We oftentimes link reputation and brand together, and although they are not one in the same, it is very important to first understand how they work together. A brand is the way you present yourself to the world.

A reputation is how others collectively perceive you. You control your brand, while a reputation is decided by others’ opinions of you, and thus, reputation directly impacts your brand. Reputation has several components: y First impressions — based on outward appearance and things that are evident right away before someone digs deeper y Relationships formed — can be good or bad y Credibility — whether something can be believed as true y Reliability — being able to have trust and faith Personal brand, on the other hand, is a bit more involved: y Voice and values — what you say about what you believe y Content — what attracts your audience y Creativity — what will help differentiate your brand y Personality — how you want people to see you y Authenticity — aim to align your brand with who you are y Relatability — be real

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So how does one go about creating their own brand? Let’s break it down.

WHAT IS YOUR WHY? Take a look inward; identify and reflect to harness your existing skills and competencies to deliberately demonstrate behaviors that make your greatest strengths and passions outwardly visible. Use knowledge to reflect on what new skills you might need to develop to get to where you want to go.

WHO IS YOUR TARGET AUDIENCE? Just like in the commercial world, a brand can not succeed if no one is aware of it.

Identify individuals or groups and analyze their relevancy and perspective. Evaluate their willingness to engage as well as their influence and involvement with your previously identified “why.”

WHAT WILL DIFFERENTIATE YOU? Look back to your “why” and try not to recreate the wheel. Leverage your existing skillset and be intentional with your behaviors, greatest strengths and passions.

“Do what you love, love what you do” was originally attributed to Confucius; he also said, “Choose a job you love, and you will never have to work a day in your life.”

I think he was onto something.

WHERE WILL YOU EXECUTE YOUR MASTER PLAN? For this, you will want to look back to your “who” and strategize accordingly.

Examples include your job, social media, your community or perhaps a charitable organization.

WHEN WILL YOU EXECUTE? Timing is a very important factor when it comes to execution. The key to proper execution does not necessarily mean jumping into the deep end. Set SMART goals to help achieve the desired outcome: y Specific: Clearly state an objective and define what you expect, who will do it and detail accountability. Be thorough.

y Measurable: Identify how you know the objective was accomplished to help you determine if you are making progress. y Achievable: Be realistic and reasonable so that you can set yourself up for success, bearing in mind that there are typically always factors beyond your control. y Relevant: Make sure that your goal makes sense and that it meets your purpose of your “why.” y Time-bound: Include a specific timeline for completion and include benchmarks to ensure you are staying on track.

HOW WILL YOU EXECUTE? Make sure you can bring it all together by utilizing your previously established SMART goals and keep in mind that your personal brand does not have to relate to your day job. If there is a will, there is usually a way, and you can oftentimes link the two together. There is no rulebook when it comes to the execution of a brand, and there is certainly no “one-size-fits-all” approach, so thinking outside the box is a common approach. At the end of the day, your brand is unique to you.

CONCLUDING TIPS y Have a focus. y Be your authentic self. y Tell a story. y Be consistent. y Be ready to fail. y Create a positive impact. y Follow a successful example. y Live your brand. y Let other people tell your story. y Leave a legacy behind.

Nicole M. DeRosa, CPA, MAcc, is a partner in the tax department at Wiss. She is an NJCPA Trustee and is active in many interest groups and committees.

She can be reached at nderosa@wiss.com.

RISK & COMPLIANCE

10 Ways to Manage Your Cyber Crime Security Like You Mean It!

BY HENRY RINDER, CPA, ABV, CFE, CFF, CGMA, DABFA, SMOLIN, LUPIN & CO., LLC

5. Regularly update software.

Outdated software is a common entry point for cybercriminals. Ensure that all software, including operating systems, antivirus programs and office applications, are regularly updated with the latest security patches. Ignoring updates can leave your systems vulnerable to known exploits that cybercriminals will likely target.

In today’s digital age, where technology is seamlessly integrated into the business, the need for robust cybercrime countermeasures has never been more critical.

For CPA firms, safeguarding sensitive financial information and maintaining client trust is paramount. With cybercrime on the steep rise, CPA firms must take a meaningful approach to managing their cybersecurity. Following are 10 key strategies that CPA firms can employ to fortify their defenses against cyber threats.

1. Stay informed and educate.

The first step in managing cybercrime security is staying informed about the latest threats and trends in the cybersecurity landscape. Cybercriminals continuously evolve tactics, so staying ahead of the curve is crucial. Regularly attend cybersecurity seminars to ensure your firm’s knowledge is current.

2. Secure your network. Ensuring the safety of your network infrastructure is of utmost importance. Utilize strong firewalls, intrusion detection systems

and encryption methods to protect data as it travels. When granting remote access, think about exclusively using equipment your firm owns and controls. Restrict access from overseas locations through the use of a geo filter.

Implement a content filtering application to screen for threats like spam, malware and viruses.

3. Continually train employees. Your employees play a critical role in maintaining cybersecurity. Use cybersecurity resources to train everyone in your firm periodically to recognize phishing attempts, social engineering tactics and other common cyber threats.

Encourage a culture of awareness where employees feel comfortable promptly reporting suspicious activity.

4. Implement multi-factor authentication (MFA). One of the simplest yet most effective ways to enhance security is by implementing MFA. This extra step can significantly reduce the risk of unauthorized access, even if login credentials are compromised.

6. Implement backup and recovery plans. No security system is foolproof, so making data backups and implementing recovery plans are essential. Regularly back up all critical data and ensure backups are stored in secure, off-site locations. Test the recovery process to make sure it will function properly in the aftermath of a cyber incident.

7. Conduct regular risk assessments.

Regular risk assessments and penetration tests are vital for identifying vulnerabilities within your firm’s digital infrastructure. Engage quality cybersecurity professionals to conduct comprehensive assessments pinpointing potential weak spots in your systems. This proactive approach will enable you to address vulnerabilities before cybercriminals can exploit them.

8. Develop an incident response plan.

The plan should outline the steps to take during a cyber breach. Assign roles and responsibilities to ensure a coordinated response that minimizes damage and facilitates a swift recovery.

9. Engage external experts. Consider partnering with external cybersecurity firms or experts specializing in protecting CPA firms. These professionals can provide tailored solutions and insights to address your firm’s cyber challenges.

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RISK & COMPLIANCE

10. Invest in cyber insurance. To mitigate the financial impact of a cyber incident, consider purchasing cyber insurance.

Cyber insurance policies are tailored to cover various aspects of cybercrime, including data breaches, business interruption, legal liabilities and recovery costs. These policies can provide financial support to help your firm recover after a cyberattack.

Work closely with an insurance expert to select a policy that aligns with your firm’s risk profile and needs. While cyber insurance doesn't replace robust cybersecurity measures, it adds an extra layer of protection and peace of mind in the face of unforeseen cyber threats.

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Cybercrime is an ever-present threat that CPA firms must confront head-on.

Firms can effectively manage their cybercrimesecurity by staying informed, conducting regular risk assessments, implementing strong security measures, educating employees and preparing for potential breaches. Taking these proactive steps not only safeguards sensitive financial information but also preserves the trust and reputation of the firm among clients.

Remember, managing cybercrime security is not an option — it’s a legal responsibility that must be embraced with diligence and determination.

Henry Rinder, CPA, ABV, CFE, CFF, CGMA, DABFA, is a member of the firm at Smolin, Lupin & Co., LLC. He is a past president of the NJCPA and can be reached at hrinder@smolin.com.

READ MORE CRYPTOCURRENCY KNOWLEDGE HUB

njcpa.org/hub/crypto

LEARN MORE Dec. 21 and additional dates, Live Webcast CYBERSECURITY 101 FOR CPAs

Dec. 30 and additional dates, Live Webcast KEY CYBERSECURITY CONTROLS FOR CPAs

Jan. 9, Paterson CYBERSECURITY | CRYPTOCURRENCY

njcpa.org/events

TAX

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TAX

Navigating the Complex World of Sales Tax Compliance

BY JAMES A. BARTEK, CPA, AND BONNIE SUSMANO, JD, MBA, WITHUM

There are many reasons that sales and use taxes are among the most complex taxes for companies to manage correctly.

NEXUS First, companies must determine where they have established nexus or a physical or economic connection to a state. For many years, a company was required to have a physical presence in a state to be subject to its sales tax. A physical presence includes, but is not limited to, an office, inventory or employee. However, in South Dakota v. Wayfair (2018), the Supreme Court held that a remote seller that established a market in a state by exceeding a specific dollar amount of sales and/or number of transactions could be required to register, collect and remit sales tax regardless of whether they were physically present in the state. Naturally, every state enacted its own economic nexus dollar threshold and/or number of transactions threshold to require remote sellers to collect tax.

As of Jan. 1, 2023, every state that imposes a sales tax had enacted an economic nexus law.

TAXABILITY Once a company has established physical or economic nexus with a state, it must determine the taxability of its goods and services sold there. Researching the taxability of a good or service in one state or multiple states is complicated, regardless of how sophisticated the company may be.

Since each jurisdiction can implement its own sales tax laws, sales taxes on products and services could differ in various states.

Some products or services could be taxable in one jurisdiction butnot another. Further, taxability decisions become even more complicated when taxable and non-taxable products or services are sold for one nonitemized price (i.e., bundled transaction).

RATES AND COMPLIANCE Once a company has nexus in a state and has analyzed its goods’ or services’

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taxability, it must apply the correct sales tax rate on the customer invoice. While this may sound simple, each state has its own state and/or local sales tax rates, adding up to more than 10,000 different rates across the United States. State or local sales tax rates can change anytime, making it much more difficult for companies to comply.

Once the sales tax is collected, it must promptly be remitted to the appropriate jurisdiction. In addition, use tax should be accrued and remitted on taxable purchases where sales tax was not collected.

STRATEGIES FOR EFFICIENCY If a company incorrectly reports its sales tax, it could expose itself to hefty interest, penalties and administrative burdens. The good news is that there are ways to manage the sales tax process efficiently. While many businesses still need a dedicated tax team, there are several options to assist companies with staying compliant while minimizing the administrative burden.

Implementing sales tax software can reduce the time spent on compliance and minimize the risk of errors. Many software providers can integrate with a company’s billing or e-commerce platform. Most vendors have an exemption certificate management feature to help companies validate and track exemptions accurately to reduce audit exposures. However, suppose these software programs are not implemented correctly. In that case, the company may create exposure by charging the wrong tax rate or incorrectly coding the taxability of goods or services in the software system.

Due to the changing state and local tax laws and guidance, businesses should stay current by attending sales tax webinars and training sessions and by reviewing key updates from qualified sources. Companies must periodically monitor physical and economic nexus thresholds to remain in compliance. Furthermore, businesses must maintain sufficient records — including exemption certificates, sales transactions,

expense reports and tax filings — to defend tax audits.

If a business has resource limitations, a cost-effective solution could include outsourcing sales tax compliance to a qualified third-party provider. Outsourcing could include nexus and taxability reviews, filings, registrations, monthly reconciliations and audit defense.

Although sales tax compliance is complex, businesses can effectively navigate the challenges with the right people, processes and technology. Keeping current with the changing tax laws, utilizing software and outsourcing essential functions can help businesses reduce the administrative costs and risks associated with sales tax compliance.

Companies can also often save money and compliance-related headaches by consulting with qualified sales tax professionals specializing in sales and use tax.

James A. Bartek, CPA, is a partner in the State and Local Tax department at Withum. He is a member of the NJCPA and can be reached at jbartek@ withum.com. Bonnie Susmano, JD, MBA, is a senior manager at Withum. She can be reached at bsusmano@withum.com.

LEARN MORE Dec. 22, Live Webinar STATE TAX NEXUS FAQ: FREQUENTLY AWKWARD QUESTIONS

Dec. 29 and additional dates, Live Webinar THE ESSENTIAL MULTISTATE TAX UPDATE

njcpa.org/events

DO MORE JOIN THE NJCPA STATE TAX INTEREST GROUP

njcpa.org/groups

NJCPA NEWS

2023 NJCPA OVATION AWARDS HONOR SUPERSTARS WHOSE EXEMPLARY EFFORTS AND STELLAR ACHIEVEMENTS ARE ADVANCING NEW JERSEY’S ACCOUNTING PROFESSION. We are pleased to recognize the multitude of ways that individuals contribute significant time, energy and intellect to developing our profession and fostering its success. The awards celebrate the high achievers who are emerging leaders, innovators, champions of diversity, educators, volunteers, notable women and other individuals who have made a substantial impact in accounting in 2022/23.

Read more about the recipients at njcpa.org/awards.

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NJCPA NEWS

LIFETIME LEADER Celebrating the standout NJCPA member of exceptional merit for remarkable contributions to the accounting profession over the course of their career.

ROBERT J. TRAPHAGEN, CPA, CGMA MANAGING PARTNER AT TRAPHAGEN CPAs & WEALTH ADVISORS

Bob has been a consistent “net giver” to the NJCPA for over 40 years, contributing his time and talent to enhance the NJCPA and the entire accounting profession.

As a past president of the NJCPA, a past member of its Board of Trustees, a past president of its Bergen Chapter, an American Institute of CPAs (AICPA) Council member, a Rutgers University Institute for Ethical Leadership member and having been recognized by former New Jersey Governor James Florio for his community involvement, Bob is truly a Lifetime Leader.

DIVERSITY, EQUITY & INCLUSION Honoring the champions of diversity, equity and inclusion (DEI) who work passionately to make the accounting profession open, welcoming and fair to encourage and promote initiatives and change, regardless of race, sexual orientation, religion, age, gender, disability status or other dimension of diversity.

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WILLIAM BRADSHAW, CDP DIRECTOR OF INCLUSION AND DIVERSITY AT WITHUM

Since joining Withum in 2020, Bill has brought DEI to the forefront.

He addressed societal changes and expanded industry partnerships while fostering an empowered workplace and encouraging further community engagement. Bill has improved policies, introduced remote learning opportunities and designed an equitable mentorship program.

JACQUELINE ENGELSMAN, PCM, CDMP DIRECTOR OF MARKETING AND BUSINESS DEVELOPMENT AT RRBB

Jacqueline co-founded RRBB’s Women’s Forum, which provides a platform for women to speak openly about their successes and challenges. She led her firm’s efforts to win NJBIZ’s 2023 “Empowering Women” Award. She also sits on the Jewish Federation of WestCentral New Jersey’s Business Networking Group and Women’s Philanthropy committees.

NJCPA NEWS

Congratulations to

Robert J. Traphagen

CPA, CGMA Traphagen CPAs & Wealth Advisors IN RECOGNITION OF EXEMPLARY EFFORTS AND STELLAR ACHIEVEMENT IN ADVANCING NEW JERSEY’S ACCOUNTING PROFESSION

www.tfgllc.com

NEW JERSEY NEW JERSEY CPA | CPA WINTER | FALL 2023/24 2022

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NJCPA NEWS

KEVIN MACALOS, MA AUDIT SENIOR AT WILKINGUTTENPLAN

In addition to Kevin’s dedication to accounting, he plays a pivotal role in promoting DEI at WilkinGuttenplan. He researches DEI trends, works with internal affinity groups and looks towards making a broader community impact. Committed to raising awareness, Kevin organizes professional networking events as an active member of the Professional Filipino American Youth (PFAY) organization.

JOSEPH A. MCGRATH, JR., CPA

CHRIS MITCHELL, M.Ed.

PARTNER AT DELOITTE

INCLUSION, DIVERSITY & CULTURE MANAGER AT MAZARS USA LLP

Joe helped develop opportunities for the Deloitte Foundation to provide nearly $60,000 in grants to support the NJCPA Scholarship Fund to assist racially and ethnically diverse students on their educational pathways toward accounting degrees and CPA career readiness.

He is a Trustee of the NJCPA Scholarship Fund and serves on the Student Programs & Scholarships Committee, Emerging Leaders Interest Group and Professional Conduct Committee.

Leadership that inspires Leaders are people who achieve the unexpected and have the vision and integrity to create an impact that matters in their organizations and their communities.

Deloitte is proud to recognize the recipients of the NJCPA Ovation Award, including our own, Jeremy I. Kaye, CPA, Chloe L. Shortino, CPA, MAcc and Joseph A. McGrath JR., CPA!

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Chris is credited with infusing DEI into the fabric of Mazars and initiating educational experiences via workshops and webinars. He has increased the diversity of staff at the leadership level and has played a major part in increasing the pipeline for qualified underrepresented candidates within the profession.

NJCPA NEWS

EMERGING LEADER Recognizing savvy superstars who have been working in the accounting profession 10 years or less and have noteworthy professional accomplishments; combined personal and professional achievements that merit special recognition; and/or actively participated in the advancement of the profession or NJCPA.

STEVEN J. BUDRYK, CPA, MS

MARK J. DALESSIO, CPA, MAccy

KERRY M. DUDA WILSON, CPA

MANAGER AT TRAPHAGEN CPAs & WEALTH ADVISORS

ASSURANCE SENIOR AT ERNST & YOUNG LLP

AUDIT MANAGER, WILKINGUTTENPLAN

As the youngest adjunct professor at Ramapo College, Steven has made significant contributions by inspiring and mentoring students and colleagues. He also mentors and educates future CPA leaders in Traphagen’s College Ambassador Program and as an active member of the NJCPA Emerging Leaders Interest Group and Student Programs and Scholarship Committee.

Mark gives back to the community through EY Connect Day, a firmsponsored day of volunteering, and the Digital Divide program, which incorporates digital device recycling to help level the playing field for families in need of digital devices. He has been a mentor for countless interns and staff at EY while also working with their recruiting team to help shape the future of the firm and share his experiences.

Kerry is a star in the making. She has served on numerous NJCPA interest groups and committees and is also a director with the Bergen Chapter. Kerry was a recipient of the NJCPA “Woman to Watch” award in 2019 and is currently a member of the NJCPA Pipeline Task Force. She is a 2020 graduate of the AICPA Leadership Academy.

Congratulations to

IN HONOR OF YOUR COMMITMENT TO THE ACCOUNTING PROFESSION IN NEW JERSEY AS AN

Steven J. Budryk CPA, MS

Kristina Kostovski CPA, MBA

EMERGING LEADER

www.tfgllc.com NEW JERSEY CPA | WINTER 2023/24

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NJCPA NEWS

KRISTINA KOSTOVSKI, CPA, MBA SENIOR ACCOUNTANT AT TRAPHAGEN CPAs & WEALTH ADVISORS

Kristina makes significant contributions to the accounting profession by inspiring and mentoring students and colleagues.

She has continued her passion for teaching at her alma mater, Montclair State University, where she is an adjunct professor. At the NJCPA, Kristina is a CPA mentor and evaluates scholarship essays.

She is also an active member of the NJCPA Bergen Chapter.

JESSICA LETA, CPA SUPERVISOR AT HOLMAN FRENIA ALLISON, P.C.

One of Jessica's most notable achievements is her initiative to develop and present training sessions. She has created valuable resources that have enhanced the skills and knowledge of her colleagues, demonstrating her commitment to her firm’s growth and the professional development of her peers. She builds strong working relationships, empowers collaboration and makes everyone feel valued and appreciated.

DANIEL J. McGUCKIN, CPA TAX SENIOR AT MAZARS USA LLP

Daniel works closely with Mazars’ Learning and Development Team, which supports employees in attaining professional qualifications suited to employees’ careers, and mentors new staff to make sure they progress and stay within the accounting industry. At the NJCPA, he has been a member of the State Taxation Interest Group since 2018 and has authored content to assist CPAs with outsourcing.

ROBERT MULLIGAN, CPA, PSA

MICHAEL NOREMAN, CPA, MST, MAcc

CHLOE L. SHORTINO, CPA, MAcc

SUPERVISOR AT HOLMAN FRENIA ALLISON, P.C.

SENIOR DIRECTOR AT ALVAREZ & MARSAL

TAX SENIOR AT DELOITTE

What truly sets Robert apart is his extraordinary achievement of passing all four parts of the CPA Exam while still in school.

In a remarkably short time since joining Holman Frenia Allison in 2018, Robert became a supervisor in 2022. This rapid rise was not only due to his technical competence but also his ability to lead, inspire and collaborate effectively with colleagues and clients alike. He also mentors junior staff.

Few can say they are an expert in a challenging income tax topic like ASC 740, part of the U.S. generally accepted accounting principles (GAAP) on how companies account for and report the effect of taxes based on income, but Mike’s technical knowledge is well beyond his years. He has been with Alvarez & Marsal for a little over a year and is one of the firm’s go-to resources on the subject. Mike has spearheaded firm initiatives on responding to ASU disclosures.

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Chloe is the epitome of giving back. She started helping her peers from college and previous internships with CPA Exam tips by creating study plans for them, sharing her experience and answering questions about the process. Internally, she worked with a partner to start a program targeted at incoming and current staff to help them pass the CPA Exam. Chloe plays an active role in Deloitte’s STRIDE program that holds monthly meetings for current staff and seniors to help them pass their exams.

NJCPA NEWS

EXCEPTIONAL EDUCATOR Recognizing full-time college accounting educators who distinguish themselves with their excellence in teaching and prominence in state-wide or regional activity to actively encourage careers in accounting and by serving as role models in academia.

ANN MARIE CALLAHAN, CPA, DPS

MARGARET O’REILLYALLEN, MBA, Ph.D.

PROFESSOR AT CALDWELL UNIVERSITY

ACCOUNTING DEPARTMENT CHAIRPERSON AT RIDER UNIVERSITY

Ann Marie is a steadfast supporter of the accounting profession and the NJCPA. While going for her doctorate, she continued to promote accounting careers to students and attended many NJCPA accounting educator events. She participates in Scholarship Fund initiatives as well as the scholarship application process by reading, grading essays and interviewing prospective scholarship candidates.

JAY A. SOLED, J.D., LL.M CHAIR OF THE DEPARTMENT OF ACCOUNTING AND INFORMATION SYSTEMS AT RUTGERS UNIVERSITY — NEWARK

Jay has been a leading professor in Rutgers’ Master in Taxation program for 35 years. He is forward thinking about preparing students for the changing world. Jay is a prolific author of tax articles and even maintains a small practice to ensure he is connected to what is occurring in the profession. He is a member of the Essex County and American Bar Associations and is a frequent speaker on radio and television programs.

NANCY UDDIN, PH.D. ACCOUNTING DEPARTMENT CHAIRPERSON AT MONMOUTH UNIVERSITY

Nancy’s service to the accounting profession is integral to the industry as a whole, both in and outside the classroom. She is a dedicated educator, providing real-world scenarios to her students, such as audit simulations, and teaches the theory behind accounting practices. She has been the treasurer of the Tinton Falls Public Library Association for the past five years and is a former president of the American Accounting Association (Mid-Atlantic region).

A visionary educator, Margaret actively shapes a curriculum that aligns with the industry, such as delving into artificial intelligence in accounting courses and studying other real-world applications to create practical case studies for interactive student learning.

Margaret played a key role in launching Rider’s online Master of Accountancy program.

EVAN C. WASSERMAN, CPA, MBA ASSISTANT PROFESSOR OF PROFESSIONAL PRACTICE AT RUTGERS BUSINESS SCHOOL — NEW BRUNSWICK

While general tutoring has been available at Rutgers Learning Centers, Evan has been instrumental in developing a program of extra help specifically for accounting students. Since 2015, Evan has been in charge of managing their undergraduate Teaching Assistants (TAs). He has been awarded the Professor of the Year Award by Beta Gamma Sigma and the Best Accounting Professor Award by the Rutgers Business Governing Association.

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NJCPA NEWS

IMPACT Recognizing those who dedicate meaningful time and energy to any of the following commendable endeavors: giving back to the community; sharing professional expertise to support others; or advancing the interests and needs of the accounting profession through active engagement, leadership or advocacy.

JOSEPH A. CAPLAN, CPA, MBA

JERRY W. CONATY, CPA, PSA, RMA, CFE

PARTNER AT RRBB

PARTNER AT HOLMAN FRENIA ALLISON, P.C.

Joe exemplifies the true qualities of a leader, focusing on talent development while also enhancing firm revenue and profitability. Joe is an active member of the NJCPA, currently serving as president of the Monmouth/Ocean Chapter and as chair of the chapter’s Healthcare Committee. Joe was previously selected for the AICPA Leadership Academy and is now a member of the AICPA Young Member Leadership Committee.

2023 IMPACT

Catherine Powers, CPA CULLARI CARRICO LLC

Jerry has spent countless hours serving on the boards of various charitable organizations including the Count Basie Center for the Arts; CSM Robert Gallagher Charitable Foundation; Hometown Heroes; and the Jersey Coast chapter of the American Red Cross. At the NJCPA, Jerry serves as the leader of the Governmental Accounting & Auditing Interest Group and as a director of the Monmouth/Ocean Chapter.

IN RECOGNITION OF EXEMPLARY EFFORTS AND STELLAR ACHIEVEMENT IN ADVANCING NEW JERSEY’S ACCOUNTING PROFESSION The Impact award recognizes those who dedicate meaningful time and energy to any of the following commendable endeavors: giving back to the community; sharing professional expertise to support others; or advancing the interests and needs of the accounting profession through active engagement, leadership or advocacy.

55 Lane Road, Ste 300, Fairfield New Jersey 07004 973.406.3955 | www.cullaricarrico.com

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NJCPA NEWS

CHRISTOPHER COWAN, CPA, CCIFP, CRIS PARTNER AT WISS & COMPANY, LLP

Chris makes a difference in all facets of his life. He is a board member of the Community Medical Center Foundation, an officer of the Shore Builders Association and a board member of the New Jersey Builders Association. Chris is also an exam writer for the Certified Construction Industry Financial Professional (CCIFP) Exam.

PETER C. DeSARNO, CPA, MBA, MS PROFESSOR AND COORDINATOR OF ACCOUNTING AT BLOOMFIELD COLLEGE

Long before Peter had full-time tenure at Bloomfield College, he always found time to serve as an adjunct professor. His teaching is impactful on many levels — sending powerful messages about the role accountants play as trusted advisors to both his accounting and non-accounting students. He is also a member of the NJCPA Pipeline Task Force.

JEREMY I. KAYE, CPA AUDIT SENIOR MANAGER AT DELOITTE

Jeremy puts words into action. His volunteer work on the finance and golf committees of Cancer Hope Network led its Board of Directors to select him to chair their inaugural Young Professionals Advisory Committee. Jeremy has also served on the NJCPA Student Programs and Scholarship Committee, reviewed scholarship essays and acted as a mentor (one of his mentees went on to start his career at Deloitte and passed the CPA Exam).

Accounting, but better.

Congratulations Christopher Cowan, Partner for being named an NJCPA Ovation Award Winner

wiss.com

FLORHAM PARK (HQ) (973) 994-9400 NEW YORK CITY (212) 594-8155

FLEMINGTON (908) 782-7300 BOCA RATON (561) 870-0630

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NJCPA NEWS

EDWARD MENDLOWITZ, CPA/ ABV/PFS/CFF

BRAD E. MUNIZ, CPA

EMERITUS PARTNER AT WITHUM

Brad makes an impact wherever he goes. Brad's wit, humor and good nature come through in all of his initiatives at the NJCPA from his entertaining, but informative, IssuesWatch accounting and auditing podcast, teaching the New Jersey Law & Ethics program and teaching accounting and auditing classes at the chapter and interest group level. A former NJCPA president, Brad also chairs the NJCPA Education Foundation Executive Committee.

Ed has demonstrated a commitment to the business community for more than 50 years.

He is recognized as a top influencer in accounting, a worldwide mentor and a dedicated educator. Ed is a well-recognized thought leader, having authored 30 books and numerous articles, taught 350-plus education courses and mentored countless professionals.

CATHERINE POWERS, CPA, PSA MANAGER AT CULLARI CARRICO LLC

Described as professional, kind, caring and intelligent, Catherine is the go-to person for anyone that needs a helping hand, whether a colleague or student. She is the vice president of the NJCPA Bergen Chapter, having been active since 2015. Catherine is a prominent supporter of, and a participant in, the NJCPA mentorship program.

Outside of accounting, she is active in Cancer Hope Network, which provides peer support for adult cancer patients and their families.

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PRINCIPAL AT CLIFTONLARSONALLEN, LLP

RALPH ALBERT THOMAS, CPA (DC), CGMA RETIRED CEO AND EXECUTIVE DIRECTOR, NJCPA

Ralph has been awarded just about every business award throughout his 23 years as CEO of the Society: The Top 100 Most Influential People in Accounting, African American Chamber of Commerce of New Jersey’s Business Award, the NJBIZ Icon Award and many more. His dedication to the accounting profession, the NJCPA, the New Jersey business community and the next generation of accountants is exemplary.

JOSEPH PASQUINO, CPA MEMBER OF THE FIRM AT SMOLIN, LUPIN & CO., LLC.

Joe is an exceptional leader who is extremely committed to developing accounting talent. He has a knack for understanding what type of training each individual would benefit from, working with them one-on-one to develop the needed skills and knowledge.

Joe was also instrumental in implementing a series of successful internal training seminars at Smolin to get the firm’s staff ready for tax season.

NJCPA NEWS

It takes balance.

We’re proud to support the NJCPA and the important role you play in the New Jersey accounting profession. Congratulations to the 2023 Ovation Impact Award recipient, our friend, and colleague, Brad Muniz.

973-994-9494 New Jersey CLAconnect.com

CPAs | CONSULTANTS | WEALTH ADVISORS

©2022 ©2023 CliftonLarsonAllen LLP. Investment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC-registered investment advisor.

NEW JERSEY CPA | WINTER 2023/24

33

NJCPA NEWS

INNOVATION Honoring those who are transforming accounting at lightning speed: driving innovation of all kinds, as it relates to accounting — leveraging new technologies, using forward-thinking data analytics strategies, implementing alternative business models or rolling out experimental engagement strategies to improve employee culture.

SHANNON L. DALY, CPA/ABV, CFE

MATTHEW F. HOLMAN, CPA, PSA

OWNER AT DALY & COMPANY, LLC

PARTNER WITH HOLMAN FRENIA ALLISON, P.C.

Shannon is a self-taught coder who utilizes this skill to create efficiencies for her forensic accounting practice.

She wrote VBA/Excel code that automatically categorizes transactions, saving her clients time and money during the recreation of records. She also previously created an iPhone app to assist with alimony calculations, which was accepted to Apple’s app store and was live for two years.

One of Matthew’s most remarkable achievements is his visionary expansion of Holman Frenia Allison’s services. Under his leadership, the firm created a division providing outsourced governmental CFO services that has evolved into a comprehensive Client Accounting and Advisory Services Department (CAAS).

DINA DeMARCO, CPA

YETTY HANDAYANI, CPA

WOMAN TO WATCH Applauding the growth and success of female NJCPA members for their leadership, potential, contributions and/or commitment to fostering the success of their colleagues.

MEMBER OF THE FIRM AT SMOLIN, LUPIN & CO., LLC

Dina is an exceptional leader who is an inspiration to her colleagues, particularly women. She is the leader of Smolin’s accounting and auditing practice and has recently been elected to the firm’s Executive Board as its first female member.

She is committed to fostering the careers of other women at Smolin and is actively involved in the firm’s mentoring program. Her strong technical skills combined with her welcoming personality put everyone at ease.

34 WINTER 2023/24 | NEW JERSEY CPA

MANAGER AT CITRIN COOPERMAN & COMPANY, LLP

Yetty is a high-performing manager who embraces and encourages a culture of diversity. She has a strong office presence, and she continually promotes work-life balance and a health-conscious work environment. She has also been a computer coach at the Brooklyn Public Library and provides income tax assistance to the Foodbank for New York City.

NJCPA NEWS

NEW JERSEY CPA | WINTER 2023/24

35

•

NJCPA NEWS

ON BEHALF OF

CONGRATULATIONS NJCPA 2023 WOMAN TO WATCH AWARD

NJCPA 2023 IMPACT AWARD

DINA DEMARCO, CPA

JOSEPH PASQUINO, CPA

SMOLIN, LUPIN & CO., LLC.

SMOLIN, LUPIN & CO., LLC.

We Are So Proud of You!

OVATION AWARD

www.smolin.com NEW JERSEY • NEW YORK • FLORIDA 36 WINTER 2023/24 | NEW JERSEY CPA

NJCPA NEWS

OLGA LUBOMIRSKY, CPA, MST

LAUREN A. NAPLES, CPA, MBA, PSA

JENNIFER R. PEOPLES, CPA

SENIOR TAX MANAGER AT MAZARS USA LLP

SENIOR MANAGER AT WITHUM

OWNER AT JENNIFER PEOPLES, CPA

Olga is committed to excellent client service and helping the next generation of CPAs. She mentors many young professionals and has volunteered for the NJCPA tax call-in program for the past three years. She is an active supporter of diversity, equity and inclusion initiatives and supports her team as a career coach and professional trainer.

Lauren leads Withum’s Consumer Products and Education groups and actively engages in the firm’s Women of Withum employee resource group, hosting networking events and coaching colleagues.

Lauren serves as a board member and treasurer for The Arc of Monmouth, Inc, a nonprofit organization that’s mission is to improve the lives of Monmouth County residents with intellectual or developmental disabilities.

Jennifer has served in nearly every NJCPA role including treasurer of the NJCPA Scholarship Fund and president of the Hudson Chapter. She is currently vice chair of the Committee Operations Committee and a member of the Professional Conduct and Student Programs & Scholarship committees. She supports the profession at every level, including interviewing students and reading and grading essays.

achieve excellence Withum congratulates this year’s NJCPA Ovation Award nominees for their outstanding achievement helping to advance New Jersey’s accounting profession to new heights.

withum.com

Bill Bradshaw: Diversity, Equity & Inclusion Award

Edward Mendlowitz: Impact Award

Lauren Naples: Woman to Watch Award

NEW JERSEY CPA | WINTER 2023/24

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•

NJCPA NEWS

VANESSA SANTORELLI, CPA, MBA

KAREN T. SAVAGE, CPA

SARAH M. SNELL, CPA, PSA, PAFM

MANAGER AT SKC & CO. CPAs, LLC

CHIEF OPERATING OFFICER AT HOLMAN FRENIA ALLISON, P.C.

Vanessa helped craft Grassi’s Semi-Annual Client Accounting Services Training Program, which provided a centralized in-house educational platform for the entire service line. As a teacher turned accountant, she uses her background to provide a foundation for others in their careers. Vanessa provides educational training in technical accounting, tax and soft skills.

Karen is extremely knowledgeable and patient — a great combination.

She is the ultimate reviewer of all of SKC & Co.’s documents.

She has run countless in-house seminars on various topics and has spent hundreds of hours training and educating staff on tax and accounting topics. Even in the height of tax season, Karen always makes time to sit with firm members and answer their questions.

Sarah fosters a culture of participation, growth and support within the accounting profession.

She was previously president of the New Jersey Chapter of the CPA Firm Management Association (CPAFMA). At the NJCPA, she serves on the Student Programs & Scholarship Committee, is a member of the Business & Industry Professionals Interest Group and previously served on the Emerging Leaders Council.

KRISTEN M. WALTERS, CPA

DANIELLE C. WEISS, CPA, MBA

PARTNER AT MAZARS USA LLP

SENIOR MANAGER-ASSURANCE AT RRBB

TAX MANAGER AT GRASSI

Kristen is passionate about the retention and advancement of women at Mazars and is a committee member for Women@ Mazars. She has focused her talents on the visibility of female leaders both within and outside of the firm and has released two video campaigns focused around female leaders at the firm. Kristen leads the charge on Mazars’ Annual New Jersey Food and Beverage Forum, which is attended by about 150 food and beverage executives annually, and its F&B Outlook Survey released annually.

38 WINTER 2023/24 | NEW JERSEY CPA

With a passion for accounting, mentoring and learning, Danielle contributes significantly to the firm, community and industry.

She co-founded and chairs RRBB’s Women’s Forum, providing an open platform for female staff to support each other in their successes and challenges. She serves as the NJCPA Monmouth/ Ocean Chapter’s CPE Director and is vice president of the BW NICE Ocean County Chapter, a women’s philanthropic networking group.

NJCPA NEWS

NJCPA Scholarship Applications Open

BY SUSAN DYER, NJCPA MEMBERSHIP DIRECTOR

As the NJCPA Scholarship Fund celebrates its 64th year, applications to apply for high school and college accounting scholarships officially opened. The deadline to apply for high school scholarships is Dec. 8, 2023, and the college scholarship application deadline is Jan. 8, 2024.

Henrietta Fuchs, CPA, president of the Fund, partner at CohnReznick and a past NJCPA scholarship recipient, reflected on what being a scholarship recipient meant to her: “The scholarships are a great way to introduce these students to the NJCPA and let them know there is a vast resource of professionals available who want nothing more than to support them in their journey to become accounting professionals and CPAs. As a past scholarship recipient myself, I know firsthand the value of connecting very early in this career path.”

“Receiving the NJCPA Scholarship means that I can worry less about finances and rather focus more on my future in accounting,” said Gianna Morra, a student at Rutgers University-New Brunswick and a 2023 scholarship winner.

“Becoming CPA-eligible requires a lot of time and money, but this scholarship gives me the support I need to continue pushing through.”

Erin Murphy, a student at Seton Hall University and a 2023 scholarship winner, added, “It provides me with a network of incredible professionals who inspire me to reach my professional goals. In addition, this scholarship empowers me to focus on my studies, engage in meaningful experiences and ultimately make a positive impact in the accounting profession.”

SCHOLARSHIP CATEGORIES The NJCPA offers the following scholarships: y High School Scholarships: College-bound high school seniors intending to major in accounting or obtain a concentration in accounting can apply for a $1,500 scholarship.

Students need a cumulative 3.2 grade point average or a minimum 1260 SAT or 26 ACT score (if taken) to apply. y Deloitte Scholars High School Minority Scholarships: In its third year, the Deloitte Scholars High School Minority Scholarship, funded by the Deloitte Foundation, is for college-bound high school seniors intending to major in accounting or obtain a concentration in accounting.

The same requirements as the general

high school scholarships apply and the scholarships are $1,500 each.

Additionally, applicants must identify as an ethnic minority. y College Scholarships: College sophomores, juniors and seniors who are enrolled in an accounting program or have a concentration in accounting at a New Jersey college can apply for a one-year college scholarship. Sophomore awards are $2,000 and applicants must have a 3.2 GPA, be a New Jersey resident, have at least three accounting credits by end of the fall 2023 semester and at least a total of six accounting credits by the end of the spring 2024 semester. Juniors and seniors must also be a New Jersey resident, have a GPA of 3.2 and have at least 12 accounting credits by the end of the spring 2024 semester, and the awards are $6,500 each.

For each scholarship there is a 500-word essay as part of the application. More information about the scholarship requirements, eligibility and how to apply is available at njcpa.org/scholarships.

To contribute to the Scholarship Fund, visit njcpa.org/scholarship

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NEW JERSEY CPA | WINTER 2023/24

39

NJCPA NEWS

Honoring Our History

40 WINTER 2023/24 | NEW JERSEY CPA

This year marked the 125th anniversary of the organization now known as the New Jersey Society of Certified Public Accountants. To commemorate this milestone and pay tribute to the people and events that made an impact along the way, we’ve installed a history wall in our office in Roseland.

We invite all members to see the wall in person. But, in the meantime, here’s a photo tour.

WATCH MORE SEE A VIDEO OF THE HISTORY WALL

youtu.be/QwPQ4oNydDc

READ MORE SEE AN IN-DEPTH NJCPA TIMELINE

njcpa.org/125

NEW JERSEY CPA | WINTER 2023/24

41

NJCPA NEWS

NJCPA Publishes Audit Report

BY JAMES HARDENBERG, CPA, CGMA, CAE, NJCPA CHIEF LEARNING OFFICER & INTERIM CHIEF FINANCIAL OFFICER

The combined financial statements for the NJCPA and Affiliates (NJCPA Education Foundation and NJCPA Scholarship Fund) for the year ended May 31, 2023, have been published.

Fiscal 2023 began with a full-fledged resurrection of many in-person events after two years of mostly virtual events due to the lingering effects of the coronavirus pandemic.

Compared to the latter part of fiscal 2022, when three NJCPA chapters began to bring members back for a total of seven in-person training sessions, fiscal 2023 included 40 chapter in-person educational events, in addition to social gatherings, along with the Annual Convention & Expo in June and the Atlantic City CPE Cluster in August.

On a combined basis, unrestricted revenues increased by 6.8% from the prior year, with much of the increase attributable to chapter, Convention and Cluster educational program fees, as well as a reduction in the market value decline for all investment portfolios combined. A material employee retention credit (ERC) refund was also received in May, which helped buoy the fiscal year-end results.

NEW JERSEY SOCIETY OF CPAs For the Society, membership dues were slightly lower compared to fiscal 2022 due

to a reduction in dues-paying members.

Overall, membership declined by the end of May 2023. To help address this challenge, a Pipeline Task Force was formed with the goal to help stabilize and maintain membership market share in the future.

Peer review fees were flat compared to fiscal 2022, as a small increase in rates helped offset ongoing firm mergers, acquisitions and practitioner retirements.

The ERC refund helped boost the year-end results and offset the market value decrease in the NJCPA investment portfolio. Total expenses increased by 11% as the pandemic continued to recede, with more printing and distribution activities, more travel and meetings, and the conclusion of the NJCPA CEO search.

NJCPA EDUCATION FOUNDATION The Foundation continued to operate and attack in a “virtual-first” mode but also began phasing back into in-person events.

As mentioned earlier, NJCPA chapters began hosting events again, though at a reduced level compared to pre-pandemic times. The Convention and Atlantic City CPE Cluster were also brought back after a two-year hiatus. Educational program fee revenue increased by 36% compared to fiscal 2022, with a corresponding increase

in the direct costs of education programs due to food, beverage, audio visual and other site-related charges that are not found with virtual programs. The Foundation ended the fiscal year with a negative change to net assets of $142,000, and though a negative result was expected for this second fiscal year of the 2021-2023 licensing cycle, it was better than budget.

NJCPA SCHOLARSHIP FUND With NJCPA chapters only beginning to phase back into in-person events after a soft relaunch in fiscal 2022, chapter contributions to the Fund were again held back for a third year in a row. However, the Fund still managed to provide $309,000 in scholarships during the fiscal year. The Fund’s investment portfolio also experienced a similar decline as the Society and the Foundation, with the overall results being a $203,000 negative change to net assets, which was also better than budget.

READ MORE NJCPA COMBINED FINANCIAL STATEMENTS

njcpa.org/about

NJCPA.ORG/MARKETPLACE

Solutions, Value and Savings for Members DISCOVER RESOURCES TO ADVANCE YOUR SUCCESS AND SAVE MONEY

42 WINTER 2023/24 | NEW JERSEY CPA

CLASSIFIEDS

MERGERS/ACQUISITIONS

Matthews, Panariello P.C., a full service Bergen County firm located in Paramus, is looking to merge or acquire firms, sole practitioners, or accounts (audits, reviews, compilations and tax preparation and compliance services). We are a peer reviewed firm with a strong track record of client retention. We have been successful in prior acquisitions; let's talk. Visit our website at www.mpcpas.com.

To confidentially discuss email Peter at pmanetta@mpcpas.com.

Whitman Transition Advisors has been helping CPA firms with their M&A needs since 2003. We are working with several new buyers in the marketplace that are paying cash up front, regardless of firm size.

If your revenues exceed $1.50MM annually then we should talk today!

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

Seize a merger/acquisition opportunity with benefits for you.

We are looking for firms ranging from $300,000 to $5,000,000 eager to combine forces as we continue to grow across northern NJ, Westchester and the Hudson Valley region.

Goldstein Lieberman & Company is ideally situated to service all types of industries. Visit www.glcpas.com; email me, Phillip Goldstein, CPA, Managing Partner, philg@glcpas.com; or call me at 800-839-5767 to have a confidential conversation.

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

Monmouth County CPA practice for sale. Approximately $750,000 annual revenue. Individual, business and trust income tax, including year-round advisement for high income clientele.

Also write up and consulting services for solid year round income. Excellent growth opportunities within existing client base. No audits or reviews. The practice has a very strong fee structure.

Owner will stay on for transition and is available to work. Reply in confidence at njcpa.org/classifieds.

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.

Small firm with offices in Princeton and Metuchen looking to expand seeks purchase of practices. Our staff consists of 2 CPAs, one EA and support staff.

Lets talk. Contact Joe Gormley CPA at 732-549-1116.

New Jersey Practices for Sale: Gross revenues shown: $194K Bergen County, NJ CPA; $700K Somerset/ Hunterdon County, NJ CPA; $1.236M Eastern Bergen County, NJ CPA; $2.107M Morris County, NJ Partnership; $825k Atlantic/ Cumberland County Area, NJ CPA; $165K Warren County, NJ CPA; $790K Union County, NJ CPA; $700K Southeast Passaic County, NJ CPA; Coming Soon $1.6M Central Middlesex County, NJ CPA; 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, Leases. Contact James M. Sausmer, CPA at 732-261-7710 or james.sausmer@gmail.com.

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NEW JERSEY CPA | WINTER 2023/24

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MEMBER STORY

A CPA Who Returned Home to MSG

BY KATHLEEN HOFFELDER, NJCPA SENIOR CONTENT EDITOR

It’s no wonder that Hoboken resident John Gibney’s love for the world’s most famous arena took him exactly where many sports enthusiasts would like to go: Madison Square Garden (MSG), home of the New York Knicks and New York Rangers. The former student manager for Fordham University’s men’s basketball team hasn’t strayed too far from the sports action.

From an internship at MSG to returning to his dream job as a senior accountant for Venue Operations at MSG Entertainment Corp (MSGE), John — who is a CPA and CFE — has truly come full circle.

“I help manage expenses for live events and sports properties, such as boxing, college basketball, the MSG arena, The Theater at MSG, Radio City Music Hall, the Beacon Theatre and the Chicago Theatre. Everyone knows about Billy Joel’s record-breaking residency that’s winding down. A lot of people don’t realize MSGE also operates these other iconic venues which host some of the stars like Diana Ross or Barry Manilow. The Rockettes are

44 WINTER 2023/24 | NEW JERSEY CPA

in full swing right now,” he says. “There’s a cross benefit for having certain acts in certain venues. I work with the finance staff who make estimates for these events.

I monitor the actuals and accruals and see where there can be some variances and work together to investigate them further.”

THE EARLY YEARS A native of Fair Haven, John grew up with the knowledge that being a CPA was a wise career path. Furthering his education at a New York-based college with a great reputation like Fordham gave him several advantages. John, who was always good with numbers, had a few internships at notable companies such as Cantor Fitzgerald and the National Basketball Players Association (NBPA) before also interning at MSG on the finance side. “I always loved emerging from Penn Station and seeing the huge marquee outside.

My father and I came here every March for the Big East Tournament. I wanted to do something in sports entertainment.

I reverse engineered that. I realized nobody wants to do the nitty gritty accounting side of it so I figured that could be a niche,” he explains. “When you are a sophomore, junior or senior, that’s the time you can try something new and network.”

After graduating from Fordham, John started his accounting career in a traditional manner as an experienced assurance associate in PwC’s Private Company Services Group in Florham Park after having previously served as an intern in New York.

“Most of my clients encompassed a wide variety of industries. I worked on small teams; I was probably doing more as a first-year than some folks working in public accounting as a second-year.”

Amid the COVID pandemic, he made the leap to corporate accounting at the fast-paced L’Oreal USA, where he stayed for two years as a finance analyst doing financial planning and analysis and supporting the engineering team. “I was making sure invoices were getting paid and monitoring budgets and trends for all the capital spending,” adds John. “It was during the pandemic and dealing with global sales.

Things were changing on a dime.”

He always wanted to go back to the sports industry, however, and eventually found the opportunity in Venue Operations this past January. “I like working on the entertainment side of MSG since it’s entrepreneurial in that new shows and residencies are always being added. The Arena itself hosts approximately 320 events per year,” he explains. “I’ve always been black and white about the numbers and like having a set of answers for everything.”

MORE SPORTS Today, John is still active in the sports world himself, having played many sports, including basketball, while growing up.

He is also a newly certified Junior College basketball official.

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