Lease Accounting: 842 Wake-Up Call
A decade of effort that began in 2006 has resulted in the issuance of ASU 2016-02, Leases (Topic 842), by the Financial Accounting Standards Board. The 10-plus years of work may have lulled some to sleep, but it’s time to start paying attention to what’s coming.
by James J. Newhard, CPA Jun 10, 2020, 14:43 PM
A decade of effort that began in 2006 has resulted in the issuance of ASU 2016-02, Leases (Topic 842), by the Financial Accounting Standards Board (FASB). The 10-plus years of work may have lulled some to sleep, but it’s time to start paying attention to what’s coming.
The fundamental idea behind the standard is recognition that a business obtains both current and future economic benefit from the property that it leases. Whether a lease involves tangible or real property, “right of use” constitutes an asset that should be measured and recognized on financial statement balance sheets. Likewise, obligations from a lease commitment are real current and future liabilities that impact the assessment of financial position and financial flows that should be reflected among the liabilities on the balance sheet.
Accordingly, Topic 842 establishes that all leases with a duration or life greater than 12 months should be “capitalized” onto the balance sheet, at a present value discount, so as to capture the imputed financing cost value of the leasing activities. Further, the recognition aims to increase transparency and comparability among organizations, along with expanded key disclosures regarding these arrangements.
This new lease accounting is happening, and it will be upon us before we know it. Between now and that implementation date (Dec. 15, 2018, for public companies and certain nonprofits and benefit plans, and Dec. 15, 2019, for other entities) there is much to learn, assess, structure, value, and negotiate. This discussion focuses on the FASB standard for U.S. GAAP. The International Accounting Standards Board issued a similar standard (IFRS 16, Leases) which contains differences. Further, since Topic 842 did not make fundamental changes to lessor accounting, the focus here is on lessees.
Leases in Context
A lease is a contract or part of a contract1 that conveys a right to control the use of identified assets (such as property, plant, or equipment) for a period of time in exchange for consideration. Topic 842 does not apply to leases of intangible assets (Topic 350), resource explorations (Topics 930 and 932), biological/agricultural (Topic 905), inventory (Topic 330), or assets under construction (Topic 360). So, not everything referenced with the word “lease” will be accounted for as a “lease” for Topic 842 purposes. For example, an executory contract for services that involves the use of equipment, but does not convey the right to use the equipment to the customer, is not a lease; it should be accounted for as a service agreement.
Leased Assets
Captured assets will not present the underlying character of leased assets, as has been the case with capital leases, but rather as intangible assets recognizing an economic value of a right-of-use of the leased asset. This asset will include up-front costs to obtain and/or establish the lease, all determinable fixed payments (including qualifying renewal options that the entity intends to exercise and control), identified rate/index-based escalations, termination costs, residuals, and asset retirement obligations, and will be capitalized at a present value using the applicable discount rate. This right of use will be amortized over the economic life on a straight-line basis, charging either a lease expense (in an operating lease model) or amortization expense (in a financing lease model).
In a contract containing a lease, certain associated costs or expenses may be nonlease components that may be treated as executory costs/expenses separate from the lease. These might be realty taxes, insurance, or common area maintenance costs. How these lessee payments are structured and contractually spelled out will determine whether or not they are part of the lease. However, the standard establishes an optional practical expedient (discussed below) to respond to the concerns of complexity.
Concurrently, the lease liability to be recorded will take into account fixed lease payments, other fixed payments (such as related fees or service charges) reduced by incentives paid or payable, and variable payments that depend on an index or rate.
For there to be an applicable lease, the right to control identified assets is conveyed throughout a period of use. Therefore, the customer must have both the right to obtain substantially all2 of the benefits from the use of the identified assets and to direct the use of the identified assets, and the lease periods are only those where the customer has both of those rights.
The requirement that there is an identified asset is fundamental to the existence of a lease. While the asset is often explicitly specified in a contract, it may be implicitly specified at the time the asset is made available for the customer’s use. The identified asset may also be a physically distinct portion of a larger asset (a “capacity portion”), such as a floor of a building.
Even if specified, a customer would not have the right to use an identified asset if the supplier has the substantive right to substitute the asset throughout the period of use. “Substantive” here means the supplier has a practical ability to, and would benefit economically from, an exercise of that right. Normal warranty obligations are not an invalidating substitution right.
In a contract containing a lease, certain associated costs or expenses may be nonlease components that may be treated as executory costs/expenses separate from the lease. These might be realty taxes, insurance, or common area maintenance costs. How these lessee payments are structured and contractually spelled out will determine whether or not they are part of the lease. However, the standard establishes an optional practical expedient (discussed below) to respond to the concerns of complexity.
Concurrently, the lease liability to be recorded will take into account fixed lease payments, other fixed payments (such as related fees or service charges) reduced by incentives paid or payable, and variable payments that depend on an index or rate.
For there to be an applicable lease, the right to control identified assets is conveyed throughout a period of use. Therefore, the customer must have both the right to obtain substantially all2 of the benefits from the use of the identified assets and to direct the use of the identified assets, and the lease periods are only those where the customer has both of those rights.
The requirement that there is an identified asset is fundamental to the existence of a lease. While the asset is often explicitly specified in a contract, it may be implicitly specified at the time the asset is made available for the customer’s use. The identified asset may also be a physically distinct portion of a larger asset (a “capacity portion”), such as a floor of a building.
Even if specified, a customer would not have the right to use an identified asset if the supplier has the substantive right to substitute the asset throughout the period of use. “Substantive” here means the supplier has a practical ability to, and would benefit economically from, an exercise of that right. Normal warranty obligations are not an invalidating substitution right.
Lease and Nonlease Components
Once a qualifying lease has been identified, the entity (lessee) must distinguish separate lease components within the contract; that is, other components that are separate from any other lease component. There may be rights to use multiple assets (for example, a lease of a building as well as other equipment/property). The right to use each asset may be considered a separate lease component if both of these criteria are met:
- The lessee can benefit from the identified asset either on its own or together with other readily available resources (previously acquired or separately available from the lessor or other suppliers).
- The underlying asset is not highly dependent on, or interrelated with, the other underlying assets in the lease contract.
If both are satisfied, the contract is bifurcated into separate lease arrangements. If only one or none are met, the entire lease arrangement is a single lease component.
Contracts may contain nonlease components, such as an agreement to purchase or sell other goods or services. Nonlease components must be broken out and accounted for separately from the lease components in accordance with the applicable GAAP guidance (unless the practical expedient, discussed below, is adopted). Some contracts contain items or provisions that do not involve the transfer of goods or services, such as fees or administrative costs that would likely require the lessee to use observable, stand-alone prices to allocate consideration. However, if the lessor provides services, such maintenance or utilities, the lessee would treat these components as executory arrangements.
Executory costs – Generally, payments for maintenance are nonlease components. In some arrangements, the lessee may reimburse the lessor or make payments on the lessor’s behalf that relate to the leased asset. Lessee payments for insurance that protects the lessor’s interest and the real estate taxes on the leased property are not separate components of the contract because they do not represent payments for goods or services. The accounting hinges on whether such payments are fixed (in-substance) or variable lease payments. Here is a look at the FASB3 examples:
Contracts may contain nonlease components, such as an agreement to purchase or sell other goods or services. Nonlease components must be broken out and accounted for separately from the lease components in accordance with the applicable GAAP guidance (unless the practical expedient, discussed below, is adopted). Some contracts contain items or provisions that do not involve the transfer of goods or services, such as fees or administrative costs that would likely require the lessee to use observable, stand-alone prices to allocate consideration. However, if the lessor provides services, such maintenance or utilities, the lessee would treat these components as executory arrangements.
Executory costs – Generally, payments for maintenance are nonlease components. In some arrangements, the lessee may reimburse the lessor or make payments on the lessor’s behalf that relate to the leased asset. Lessee payments for insurance that protects the lessor’s interest and the real estate taxes on the leased property are not separate components of the contract because they do not represent payments for goods or services. The accounting hinges on whether such payments are fixed (in-substance) or variable lease payments. Here is a look at the FASB3 examples:
- Case A: A lessor and lessee enter into a five-year lease of a building with fixed annual lease payments of $10,000 plus insurance (protects lessor as named insured) on the building and the applicable real estate taxes. The insurance and taxes will be billed directly to the lessee. The insurance and taxes are not components of the contract, which has a single lease component – the right to use the building. Accordingly, for Topic 842 purposes, the lessee’s payments of the insurance and taxes represent a reimbursement of the lessor’s costs; not payments for goods or services in addition to the building use. Since these amounts are variable (not tied to an index or rate), payments will be charged to the income statement as period expenses.
- Case B: Assume the same facts and circumstance as Case A, except the fixed annual lease payments are $13,000. There is no additional billing for the insurance and taxes, but the contract indicates that the annual payments represent $10,000 for rent, $2,000 for real estate taxes, and $1,000 for building insurance. Again, insurance and taxes are not components of the contract, which still has a single lease component (the right to use the building). Since the tax and insurance payments are fixed, the entire $65,000 ($13,000 per year) constitutes the lessee payments for the single component of the contract, and will be included in the measurement of the liability.
- Case C: Assume the same facts and circumstance as Case B, except the lease is for space within the building rather than for the entire building, and the fixed annual lease payments of $13,000 also cover lessor’s performance of common area maintenance activities. Again, insurance and taxes are not components of the contract. However, the common area maintenance is a component because the lessor’s activities transfer services to the lessee. Common area maintenance is a single component in this contract rather than multiple components because 10 services are performed as needed over the same time period. Therefore, in Case C, there are two components – a lease component and a nonlease component. The full consideration of $65,000 will be allocated between the two components, likely using the observable stand-alone prices.
Topic 842 does allow for estimating these stand-alone prices in the absence of observable market prices.
Practical expedient – Topic 842 provides an accounting policy election option that will permit the lessee to account for each separate lease component and its related nonlease component as a single lease component. This practical expedient4 is an election by class of underlying asset, and it is intended to reduce the costs and administrative burdens of allocating consideration. The FASB expects the expedient to be adopted when the nonlease components are not significant in relationship to the lease component. The practical expedient, however, does not permit lessees to account for multiple lease components of a contract as a single lease component.
Practical expedient – Topic 842 provides an accounting policy election option that will permit the lessee to account for each separate lease component and its related nonlease component as a single lease component. This practical expedient4 is an election by class of underlying asset, and it is intended to reduce the costs and administrative burdens of allocating consideration. The FASB expects the expedient to be adopted when the nonlease components are not significant in relationship to the lease component. The practical expedient, however, does not permit lessees to account for multiple lease components of a contract as a single lease component.
Lessee Accounting
The date on which the lessor makes the underlying asset available for use and control by the lessee is the lease commencement date. For each lease component, the lease term represents the non-cancellable period for which the lessee has the right to use the underlying asset, together with the following:
- Periods covered by an option to extend the lease that the lessee is reasonably certain to exercise
- Periods covered by an option to terminate the lease that the lessee is reasonably certain not to exercise
- Periods covered by an option to extend (or not to terminate) the lease in which exercise of the option is controlled by the lessor
The lessee should assess any option to purchase the underlying asset on the same basis as the above options. Should the lessee be reasonably certain to exercise the purchase of the asset, the lease is to be classified as a finance lease (see further discussion below).
Enforceability plays a relevant part in assessing the lease arrangement. Per 842-10-55-23 of the standard, a lease is no longer enforceable when both the lessee and the lessor have the right to terminate the lease without permission from the other party with no more than an insignificant penalty. In a related-party situation (a scenario where the same party is both the lessor and the lessee), the lease arrangement might appear that the termination rights pertain to both the lessee and lessor, and, accordingly, the lease is no longer enforceable. If this assessment is determined, one might conclude that the related-party leasing arrangement would not be covered by Topic 842.
Additionally, when a penalty for failure to renew is so significant that it is reasonably certain at commencement that the lease will be renewed, that renewal period should be included in the lease term.
Certain lease agreements enable the lessee to terminate the lease early, but such a termination results in the lessee guaranteeing the residual value of the underlying asset at the date of early termination. In such arrangements, it should be assessed as to whether the guarantee is enough to provide significant incentive to continue to the full term of the lease.
Finance lease vs. operating lease – A lessee shall classify a lease as a finance lease (similar to capital leases under Topic 840) if any one of the following criteria is met:
Enforceability plays a relevant part in assessing the lease arrangement. Per 842-10-55-23 of the standard, a lease is no longer enforceable when both the lessee and the lessor have the right to terminate the lease without permission from the other party with no more than an insignificant penalty. In a related-party situation (a scenario where the same party is both the lessor and the lessee), the lease arrangement might appear that the termination rights pertain to both the lessee and lessor, and, accordingly, the lease is no longer enforceable. If this assessment is determined, one might conclude that the related-party leasing arrangement would not be covered by Topic 842.
Additionally, when a penalty for failure to renew is so significant that it is reasonably certain at commencement that the lease will be renewed, that renewal period should be included in the lease term.
Certain lease agreements enable the lessee to terminate the lease early, but such a termination results in the lessee guaranteeing the residual value of the underlying asset at the date of early termination. In such arrangements, it should be assessed as to whether the guarantee is enough to provide significant incentive to continue to the full term of the lease.
Finance lease vs. operating lease – A lessee shall classify a lease as a finance lease (similar to capital leases under Topic 840) if any one of the following criteria is met:
- The lease transfers ownership of the underlying asset to the lessee by the end of the lease term.
- The lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise.
- The lease term is for the major part of the remaining economic life of the underlying asset.
- The present value of the sum of the lease payments and any residual value guaranteed by the lessee not already reflected in the lease payments equals or exceeds substantially all of the fair value of the underlying asset.
- The underlying asset is of such specialized nature that it is expected to have an alternative use to the lessor at the end of the lease term.
As with Topic 840, should none of the criteria for finance lease classification be met, the lessee shall classify the lease as an operating lease.
Discount rates are used to determine the present value of the lease payments that an entity will use to evaluate the “substantially all” criterion in the finance lease classification test for lessees. The discount rate is the “rate implicit in the lease” or the lessee’s incremental borrowing rate, if the implicit rate cannot readily be determined. A risk-free rate is a third option.
Short-term leases – Depending on the underlying asset to which the right to use relates, lessees can make an accounting policy election to exercise a short-term lease exception. Under this election, the lessee may apply accounting similar to Topic 840’s operating lease accounting. Eligible short-term leases are those that, at the commencement date, have a lease term of 12 months or less and do not include an option to purchase the underlying asset. The short-term lease exception is an election that can only be made at the commencement date. Further, a lease that qualifies as a short-term lease at commencement no longer meets the definition of a short-term lease when there is a change in the lessee’s assessment of either of the following:
Discount rates are used to determine the present value of the lease payments that an entity will use to evaluate the “substantially all” criterion in the finance lease classification test for lessees. The discount rate is the “rate implicit in the lease” or the lessee’s incremental borrowing rate, if the implicit rate cannot readily be determined. A risk-free rate is a third option.
Short-term leases – Depending on the underlying asset to which the right to use relates, lessees can make an accounting policy election to exercise a short-term lease exception. Under this election, the lessee may apply accounting similar to Topic 840’s operating lease accounting. Eligible short-term leases are those that, at the commencement date, have a lease term of 12 months or less and do not include an option to purchase the underlying asset. The short-term lease exception is an election that can only be made at the commencement date. Further, a lease that qualifies as a short-term lease at commencement no longer meets the definition of a short-term lease when there is a change in the lessee’s assessment of either of the following:
- The lease term so that, after a change, the remaining term extends to greater than 12 months
- Whether it is reasonably certain to exercise an option to purchase the underlying asset
Once this trigger occurs, the lessee must apply Topic 842 recognition for the lease.
Initial measurement – At the commencement date, a lessee shall measure both of the following:
Initial measurement – At the commencement date, a lessee shall measure both of the following:
- The lease liability set at the present value of the lease payments not yet paid, discounted using the discount rate for the lease at commencement
- The right-of-use, the value of which consists of the amount of the initial measurement of the lease liability, the lease payments made to the lessor at or before the commencement date (minus any lease incentives received), and any initial direct costs incurred by the lessee
Subsequent measurement: operating lease – After the commencement date, a lessee recognizes all of the following in the income statement (unless the costs are included in the carrying amount of another asset in accordance with other topics):
- A single lease cost, calculated on a straight-line basis over the remaining lease term (unless another methodology is clearly more representative to the pattern of “use”)
- The variable lease payments (not indexed or rate-derived) that were not included in the lease liability
- Any impairment of the right-of-use asset determined
While Topic 842 will change the “face” of the balance sheet, the pattern of expense recognition of an operating lease should, essentially, be identical to the operating lease expense recognition under existing Topic 840.
Another matter that is noteworthy is that operating leases will (as is often the case in existing Topic 840 treatment) require a prepaid/accrued rent recognition for the difference between straight-line expense and fixed rent payment cash flows. Also, since underlying leased assets are, essentially, Topic 360 assets, impairment matters are likewise based on Topic 360 assessment. Any impairment recognition would result in future straight-line single lease cost recognition to be recalculated based on the remaining right-of-use cost over the remaining lease period.
Subsequent measurement: finance lease – After the commencement date, a lessee recognizes all of the following in the income statement (unless the costs are included in the carrying amount of another asset in accordance with other topics):
Another matter that is noteworthy is that operating leases will (as is often the case in existing Topic 840 treatment) require a prepaid/accrued rent recognition for the difference between straight-line expense and fixed rent payment cash flows. Also, since underlying leased assets are, essentially, Topic 360 assets, impairment matters are likewise based on Topic 360 assessment. Any impairment recognition would result in future straight-line single lease cost recognition to be recalculated based on the remaining right-of-use cost over the remaining lease period.
Subsequent measurement: finance lease – After the commencement date, a lessee recognizes all of the following in the income statement (unless the costs are included in the carrying amount of another asset in accordance with other topics):
- Amortization (expense) of the right-of-use, calculated on a straight-line basis over the remaining lease term (unless another methodology is clearly more representative to the pattern of “use”)
- Interest expense from the lease liability “amortized” like debt
- The variable lease payments (not indexed or rate-derived) not included in the lease liability
- Any impairment of the right-of-use asset determined
While Topic 842 will change the “face” of the balance sheet, the pattern of expense recognition of a finance lease should, essentially, be identical to the capital lease expense recognition under existing Topic 840.
Lease modifications – A lease modification occurs when there is a change to the terms and conditions of a contract that results in a change of the scope of, or consideration for, a lease. If a lease is modified, the contract must be reassessed to determine whether there is still a lease component. Assuming the lease component remains, the change is assessed to determine whether it should be treated as a separate contract or a restating of the existing lease component.
Lease modifications and the related reassessment are likely to be a column of their own in a future issue of the Pennsylvania CPA Journal.
This presentation falls short of addressing all the matters and implications that companies and CPAs will face with the implementation of the lease standard. Matters of master lease agreements, lease incentives, termination, subleases, sale/leasebacks, the fate of leveraged leases, business combinations, lessor accounting, and income tax accounting5 are beyond the scope of this examination.
Lease modifications – A lease modification occurs when there is a change to the terms and conditions of a contract that results in a change of the scope of, or consideration for, a lease. If a lease is modified, the contract must be reassessed to determine whether there is still a lease component. Assuming the lease component remains, the change is assessed to determine whether it should be treated as a separate contract or a restating of the existing lease component.
Lease modifications and the related reassessment are likely to be a column of their own in a future issue of the Pennsylvania CPA Journal.
This presentation falls short of addressing all the matters and implications that companies and CPAs will face with the implementation of the lease standard. Matters of master lease agreements, lease incentives, termination, subleases, sale/leasebacks, the fate of leveraged leases, business combinations, lessor accounting, and income tax accounting5 are beyond the scope of this examination.
Presentation
Balance sheet – A lessee should present in the statement of financial position, or disclose in the notes, the following:
- Right-of-use assets presented as noncurrent assets, separate from other assets, and finance lease right-of-use separately presented from operating lease right-of-use.
- Lease liabilities separate from other liabilities, with finance lease liabilities separately presented from operating lease liabilities. Note that current portions of the lease liabilities will likewise be separately presented as current liabilities.
Income statement – A lessee need not separately present the items of expense, except for any impairments. Accordingly, operating lease expense is presented in continuing operations, as it had previously been, and finance-lease-related amortization and interest expense are presented in a manner consistent with how the entity presents depreciation and amortization and its interest expense.
Statement of cash flows – A lessee reports cash payments for the principal portion of finance lease liabilities as financing activities, and the interest portion of finance lease payments consistent with how it is prescribed in Topic 230 (supplemental disclosures). Operating lease cash payments are presented with operating cash flows, except any payments representing costs to bring another asset to the condition necessary for its intended use (investing activities). Lease payments for short-term leases (not reflected on the balance sheet) and variable lease payments (not included in lease liabilities) are presented within operating activities. Any initial recognition that is a noncash activity is disclosed as a supplemental noncash item.
Footnote disclosures – The goal of the disclosures is to be sufficient to enable financial statement users to assess the amounts, timing, and uncertainty of cash flows arising from leases, requiring both qualitative and quantitative information, including the following:
Statement of cash flows – A lessee reports cash payments for the principal portion of finance lease liabilities as financing activities, and the interest portion of finance lease payments consistent with how it is prescribed in Topic 230 (supplemental disclosures). Operating lease cash payments are presented with operating cash flows, except any payments representing costs to bring another asset to the condition necessary for its intended use (investing activities). Lease payments for short-term leases (not reflected on the balance sheet) and variable lease payments (not included in lease liabilities) are presented within operating activities. Any initial recognition that is a noncash activity is disclosed as a supplemental noncash item.
Footnote disclosures – The goal of the disclosures is to be sufficient to enable financial statement users to assess the amounts, timing, and uncertainty of cash flows arising from leases, requiring both qualitative and quantitative information, including the following:
- Information and general descriptions about the leases, including significant judgments made and amounts recognized in the financial statements relating to those leases
- Aggregated and/or disaggregated information so that useful information is not obscured
- Basis, terms, and conditions on which variable lease payments are determined
- Existence, terms, and conditions of options to extend or terminate leases, including narrative as to their inclusion in right-of-use assets and lease liabilities
- Existence, terms, and conditions of residual guarantees
- Restrictions or covenants imposed by leases
- Sublease information
For each period presented in the financial statements, the lessee should disclose the following:
- Finance costs, segregated between amortization and interest
- Operating lease costs
- Short-term lease costs
- Variable lease costs
- Sublease income
- Net gains or losses from sales/leasebacks
- Amounts segregated between finance and operating leases for cash paid for amounts in the measurement of lease liabilities, supplemental noncash information on lease liabilities, weighted-average remaining lease term, and weighted-average discount rate
Again, ASU 2016-02 is effective for years beginning after Dec. 15, 2018, for public companies (and certain nonprofits and benefit plans), and for years beginning after Dec. 15, 2019, for other entities. Early adoption is permitted. In transition, a modified retrospective approach is required to apply guidance to all periods presented in the financial statements. Topic 842 provides implementation-practical expedients applicable to the following:
- Lease identification and classification that commenced prior to the effective date
- Initial direct costs that commenced prior to effective date
- The ability to use hindsight in assessing costs, terms, periods, and options
1 Per ASU 2014-09, Revenue from Contracts with Customers (Topic 606), a contract is an agreement between two or more parties which creates enforceable rights and obligations.
2 Per ASU 2016-02, Section 842-10-55-2(c), 90 percent or more of the fair value of the underlying assets amounts to substantially all the fair value of the underlying asset.
3 Per ASU 2016-02, Section 842-10-55-141 through 842-10-55-145.
4 Per ASU 2016-02, Section 842-10-15-37.
5 The IRS is considering the possibility of revenue procedures to reflect implementation and even possible tax recognition conformity with implementation of ASU 2014-09, Revenue from Contracts with Customers (Topic 606). Currently, it is not determined whether a similar consideration would be applied with ASU 2016-02, Leases (Topic 842).
James J. Newhard, CPA, is a sole practitioner in Paoli, a CPE presenter for Loscalzo Associates, a past president of PICPA’s Greater Philadelphia Chapter, and a member of numerous PICPA committees, including the Pennsylvania CPA Journal Editorial Board. He can be reached at jim@jjncpa.com or on Twitter @CatalystJimCPA.
2 Per ASU 2016-02, Section 842-10-55-2(c), 90 percent or more of the fair value of the underlying assets amounts to substantially all the fair value of the underlying asset.
3 Per ASU 2016-02, Section 842-10-55-141 through 842-10-55-145.
4 Per ASU 2016-02, Section 842-10-15-37.
5 The IRS is considering the possibility of revenue procedures to reflect implementation and even possible tax recognition conformity with implementation of ASU 2014-09, Revenue from Contracts with Customers (Topic 606). Currently, it is not determined whether a similar consideration would be applied with ASU 2016-02, Leases (Topic 842).
James J. Newhard, CPA, is a sole practitioner in Paoli, a CPE presenter for Loscalzo Associates, a past president of PICPA’s Greater Philadelphia Chapter, and a member of numerous PICPA committees, including the Pennsylvania CPA Journal Editorial Board. He can be reached at jim@jjncpa.com or on Twitter @CatalystJimCPA.
