The AICPA’s Private Companies Practice Section consistently finds that the recruitment of qualified staff is a top concern for CPA firms. In its 2019 Trends in the Supply of Accounting Graduates and the Demand for Public Accounting Recruits, the AICPA reports a decline in CPA candidates, yet the U.S. Bureau of Labor Statistics projects employment for accountants and auditors to grow by 6% from 2018 to 2028. These opposing trends have important implications for the public and profession, especially considering the high number of CPAs expected to retire soon.

Financial services are critical to the long-term viability of an organization, yet the global pandemic and the resulting economic uncertainty presents a challenge even to the most well-established banking relationships. Over the past year, lenders and borrowers contended with the introduction, and regulatory evolution, of new federal programs – such as the Paycheck Protection Program – and the frustrations of maintaining operations amidst public health regulations. Here are a few tips for fostering productive communications with your lender during difficult times and beyond.

Pressures are put on CPAs from many sources. An unfortunately common source is from banks and other lenders pressuring them to provide assurance regarding a client’s financial strength. Many CPAs have shared their frustrations regarding veiled threats from aggressive brokers and lenders, alleging that the CPAs’ clients will not qualify for a loan without receiving a letter supporting the clients’ loan qualifications. Some brokers even suggest that the client should seek a “more cooperative” CPA.

Owners of investment property are acutely aware of the double-edged sword that awaits a sale. The owners will finally be able to realize the benefit from years of hard work maintaining the appreciated property, but they also could face a substantial tax liability on the sale of the investment property. For taxpayers who wish to continue holding an investment rather than cashing out, Internal Revenue Code (IRC) Section 1031 provides a strategy that allows for tax deferral whereby the taxpayer exchanges the investment property for like-kind property. There have been some major changes to Section 1031 in recent years. Notably, the Tax Cuts and Jobs Act (TCJA) made only exchanges of real property eligible for Section 1031 exchanges, and the Treasury Regulations that were issued in November 2020 provide a revised definition of real property for purposes of Section 1031. However, understand that President Joe Biden’s tax plan, mentioned during the 2020 election, referenced eliminating tax breaks for real estate investors; thus, Section 1031 could be eliminated as a strategy in the future

The AICPA Auditing Standards Board (ASB) issued SAS No. 134, Auditor Reporting and Amendments, Including Amendments Addressing Disclosures in the Audit of Financial Statements in May 2019. It was originally effective for audits of financial statements for periods ending on or after Dec. 15, 2020, but implementation was delayed for one year until Dec. 15, 2021.

The Tax Cuts and Jobs Act of 2017 (TCJA) reformed many aspects of the Internal Revenue Code of 1986, but the $10,000 state and local tax deduction limitation (SALT cap) has remained one of its more controversial aspects. The SALT cap prevents many individuals from being able to fully deduct their state and local income and property taxes on their federal individual income tax returns. This is further exacerbated for individuals filing in multiple states through their ownership interests in partnerships, S corporations, and certain limited liability companies.

The onset and spread of COVID-19 taught us that the ability to adapt and adjust has never been more critical. For college educators, the virus created what at times seemed like insurmountable obstacles and uncertainties. Would courses resume in person, move to virtual, or be a combination of both? If virtual or hybrid, how would faculty ensure that students are learning? What modalities could be implemented to help the transition process? How did COVID-19 impact how students would complete requirements such as internships or externships?

To meet the rapidly changing demands of the accounting profession, the next generation of CPAs must have a digitally focused skill set and a strong portfolio of soft skills in communication, critical thinking, and collaboration, among others. It is critical for organizations of all sizes to engage in upskilling initiatives to ensure CPAs continue to thrive in the future. Accounting programs at colleges and universities can also play an important role by integrating essential digital competencies and soft skills into the curriculum.

Dedication and teamwork were common themes when speaking with four partners at the Big 4 accounting firms in Philadelphia regarding what it takes to become a partner. While they are all leaders at Big 4 firms, the attributes they discussed hold value for would-be partners at firms of all sizes.

CPAs must be aware of emerging technologies that have the potential to disrupt their profession. Blockchain technology is one of them. Blockchain streamlines trans-action accounting and enables real-time reporting and real-time audit. We are still at the early days of the technology, but considering the potential impact on the profession, CPAs need to understand what this new technology will bring.

The Pennsylvania Department of Revenue (DOR) released two separate letter rulings during 2017 that provide guidance on the sales and use tax treatment of information retrieval services and support services related to computer software. The DOR concluded that both are subject to tax based on its interpretation of Act 84, the budgetary legislation enacted in July 2016. These rulings are concerning, since it is questionable whether DOR’s positions are consistent with the statute and the legislative intent of Pennsylvania lawmakers.

One disadvantage of forming a Subchapter C corporation is the unfortunate reality of “double taxation.” The first level of taxation occurs when the business pays corporate income taxes on its profits. The second level occurs when the previously taxed profits are distributed to shareholders as dividends. Even if the corporation does not have sufficient cash flow and decides to distribute property that has appreciated in value to its shareholders, the tax is typically unavoidable.

In 2016, the Financial Accounting Standards Board’s Emerging Issues Task Force deliberated nine issues concerning cash flows, including the diverse ways restricted cash is classified and presented in the statement of cash flows.

In the past, Liability Lessons has examined the teamwork required when multiple professions and disciplines interact with a single client. In this column, the focus is on team play at a very specific moment in the life of a business: the moment of conception. This is a particularly sensitive moment from the standpoint of professional risk.

At many middle-market companies, mergers and acquisitions (M&A) are few and far between. But if your company’s strategy includes growth by acquisition, M&A needs to be a core competency. Fortunately, this does not require staffing a large internal transaction group.

The first couple of months of the new decade went by fairly smoothly, and then our worlds were rocked by COVID-19. The pandemic resulted in rampant illness and death, shut down life as we know it, crashed our economy, and made working from home the new business-survival model. What many thought would be a few weeks of change turned into months. Soon, we will hit a year. Schools and businesses have closed or turned to online and hybrid solutions. Being resilient and adaptive have become our new norms.

The 2020 election will be remembered for three things: the coronavirus pandemic, the delay in counting caused by millions of mail-in ballots, and the failure once again of pollsters to accurately gauge the leanings of the electorate. This year was the first presidential election where Pennsylvanians could vote by mail (beyond absentee ballots), and nearly 3 million mail-in ballots were cast in the commonwealth.

The 11th biennial Report to the Nations on Occupational Fraud and Abuse was issued by the Association of Certified Fraud Examiners (ACFE) earlier in 2020. Since its inception in 1996, the study has focused on occupational fraud and abuse, which is defined as “the use of one’s occupation for personal enrichment through the deliberate misuse or misapplication of the employing organization’s resources or assets.”

Employee benefit plan sponsors, administrators, and auditors have spent much of the past year addressing the effects the COVID-19 pandemic has had on plan operations, administration, and audits. But we can’t rest easy: the effects of the pandemic could continue well into 2021 and beyond.

When the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law, taxpayer-friendly opportunities were aimed at quickly getting cash into the hands of businesses who needed it most. One method of accomplishing this included the temporary reintroduction of net operating loss (NOL) carrybacks. While this was certainly a welcomed benefit, some taxpayers who were involved in a merger or acquisition in 2018, 2019, or 2020 may need to review their old agreements to make sure the benefits of their NOLs are preserved.