Was the Individual Mandate Eliminated?

One of the more controversial aspects of the Affordable Care Act was the individual mandate.  The law required everyone to buy health insurance or pay a penalty to the government come tax time.  Some thought it was wrong for the government to force people to buy something they might not want; and others said if people weren’t required to buy health insurance then only sick people would buy insurance and health insurance would quickly become unaffordable.  The Tax Cuts and Jobs Act was said to have eliminated the individual mandate.  Some people are very happy about the mandate going away while others think it is a terrible idea.  This blog is not here to debate that point.  The question this blog is focused on is, was the individual mandate actually eliminated?

Because the Supreme Court determined that the individual mandate was a tax, Congress could address the amount of that tax in a piece of tax legislation even without touching any other aspects of the Affordable Care Act; and that is exactly what congress did in the Tax Cuts and Jobs Acts.  The law did not eliminate the individual mandate, instead it set the tax rate for not having insurance to zero.  What is the difference between eliminating the individual mandate and setting the amount to zero?  To someone not having insurance, the answer is not much, but to any other organization having to comply with the Affordable Care Act the answer is a lot.

For example, large employers must still provide insurance to their employees or face fines and penalties even though the employees no longer face a payment for not having insurance.  In fact, employers must still provide all the reporting to employees they were required to provide before the individual mandate rate was set to zero.  For example, the 1095-C form is still required to be sent to all employees.  That means everyone will still be getting their documentation that they have insurance through their employer even though there is no payment due for not having such documentation.  This means business and organizations will still be incurring a lot of cost to comply with reporting requirements around the individual mandate even though everyone is reporting that that individual mandate has been “repealed.”

So they next time you hear someone say the individual mandate has been eliminated, maybe you can have a little fun with them by pointing out it hasn’t been eliminated, only set to zero.



Lead by Example

Do what I say, not what I do not only doesn’t work for raising kids, it doesn’t work for setting a culture within an office either. How many times have you heard someone say “we allow flexible working arrangements, but we keep losing staff who say we aren’t flexible enough.” Or, have you heard someone say, “I tell my staff to shut down but they complain that there is no separation between family time and work time.”

When I’m feeling especially courageous, the question I like to ask is what do you do? Do you ever work from home, or do you show up at the office every day? Do you ever leave early to make it to your kid’s game that starts at 5:00? Let’s face it, our staff looks at what we are doing to understand the real rules of the work place. Maybe you are in a different life stage with all your kids gone and out of the house, so you don’t have as many family events, but then look at who you reward with better salary increases and promotions. Is it the person who utilizes the flexible working arrangements but still gets all their work done, or is it the person still working in the office when you leave every day?

On emails, are you responding, or worse, sending out emails at all hours of the day? Do you review and respond to emails even while you are on vacation? Your staff is watching you, and you are setting expectations with others based on your behavior. I hear people justify their late-night emails by saying that I didn’t want to forget that thought or idea, but I don’t expect people to actually reply. My response is, don’t you know how to use the tools in your email program? Almost every email program has the ability to delay the delivery of an email. Write your email, just set it for delivery the next morning. If you don’t know how to use that feature, then you must know how to use the draft feature. Write the email and save it as a draft and make a habit of going through your drafts and sending them out every morning.

My final question is how many of you tell your staff to stay home if they are sick, but then come into the office yourself when you are sneezing and hacking? Your staff sees that behavior and emulates it. Worse, you’re probably getting them sick, and hitting productivity even harder than if you stayed at home and got what work you could get down from there. And with today’s remote working tools, that is pretty much everything.

So are you walking the walk or are you complaining that people don’t believe what you say?

TSCPA Midyear Board Meeting

The Midyear Board meeting of TSCPA took care of business; got input on critical issues to the future of CPAs and TSCPA; and shared some critical perspectives from interesting speakers. Lei Testa from Fort Worth was presented as the next Chairman-elect of TSCPA along with a worthy slate of officers and directors. TSCPA finances are solid but looking to the future we made the decision to increase dues by $5 to make sure we can continue to provide the services and support needed by our members.

TSCPA received input from Board members covering three areas:

  •  Leveraging and Leading with Technology
  • Attracting and Engaging Younger Members
  • Improving the CPE Experience

The feedback is being processed by staff, and recommendations on actions TSCPA should take will be added to our strategic plan implementation, which already identified these as areas of focus in the coming years.

Dr. Jim Lee discussed the economic impact of Hurricane Harvey. One of the big questions is about the long-term impact. Looking at other major hurricanes in the last decade, Katrina and Ike, New Orleans and Galveston suffered permanent 15% drops in population. The question is will this also happen to Houston, Corpus Christi, Port Aransas and other places. If it does, such loss can permanently alter the economic prospects for those locations.

Donny Shimamoto discussed paths CPAs need to take to innovation. He looked at three major paths for external auditors, tax practitioners and B&I professionals. In B&I we have all experienced the move from processing transactions to managing processes as work is automated. The next steps are to move further along in providing analysis and, more importantly, information about those transactions so better business decisions can be made.

Donny also discussed some interesting insights that apply to all professional accountants. The era of “good enough” is dead. Expectations are higher and the ability to be more precise is available and expected. Learning “just in case” is being replace by learning “just in time.” And the only true way to make sure you are needed in an era of hyper automation and robotics is to provide things that rely on truly human traits like creativity, imagination, emotion, intuition and ethics.

To wrap up the meeting Bret Oliver provided an overview of the impacts of tax reform on Texas and Jimmy Martens discussed the challenges of sales tax audits. In the end, 200 plus CPAs headed back to the four corners of Texas to share what they learned and listen to their fellow CPAs, so they can be prepared to discuss what is important at the annual meeting in San Antonio in June.

Revenue Recognition Update

All public companies that had not early-adopted the standard started using the new ASC 606 rules to recognize revenue a couple of weeks ago. I also attended my first Financial Reporting Executive Committee (FinREC) meeting last week.  While the two topics may not seem related, they are, because FinREC has been overseeing the release of numerous papers from 16 industry task forces over the past couple of years to help everyone better understand how the new revenue standard will impact the accounting for revenue.  The task forces and number of topics are as follows:


Industry Papers Issued Additional Papers Anticipated
Aerospace & Defense 12  
Airlines 14  
Broker Dealers 8 1
Construction Contractors 7  
Depository Institutions 2  
Gaming 14 3
Hospitality 4 1
Health Care 6 4
Insurance Entities 1 1
Asset Management/Investment Co. 10  
Not-for-Profit 4  
Oil & Gas 5  
Power & Utilities 10  
Software 9 1
Telecommunications 10 2
Timeshares 6 1


There is still more work to be done, and some of the additional papers may have already been issued as you are reading this blog.  If you are in the private sector, I strongly encourage you to read papers that are related to your industry or topics that your company deals with regularly.  Additional resources from the AICPA can be found here. It may seem that we have crossed the finish line because the standard is now required, but I suspect there is still a lot of work and re-work to be done in the coming years are we fully understand and implement this once-in-a-lifetime change in accounting.

2018 Tax Changes Impacting 2017

The new tax act doesn’t change any rules or law for taxes that companies will pay related to 2017. If you’re a CPA that spends their time working on tax filings, you have plenty of time to learn about the new law and how it will impact your work.  The earliest it might impact you is your company’s first quarter tax payment and that is 4 months away.  If your job is tax planning, you have a little less time; but your work also does not require the accuracy of an actual tax form or financial statement filing so you have some time to react and can estimate in the meanwhile.  If your job is determining the tax provision to be included in the company financial results, then you are already out of time.

You’re out of time because accounting rules require deferred tax assets and liabilities be based on the tax law in effect at the financial statement date.  When President Trump signed the tax act before Christmas, that meant it became the law in effect as of December 31, 2017, and therefore tax assets and liabilities which will be realized and paid in future years must be based on the new law.  Considering the billions of dollars of deferred taxes, the change in rates is likely to be material for many companies, either increasing or decreasing income all at once in the quarter ending December 31, 2017.

Income will increase if the company has a net deferred tax liability as that liability is decreased.  Income will decrease if the company has a net deferred tax asset as that asset value is reduced.  Those effects need to be included in quarter-end financial results which are usually finalized in the first few days after quarter-end.  That means CPAs working on tax provisions just have a couple of weeks to get the answer computed, and it has to be right because the change will be audited.  The likely materiality of the adjustment also means that many public companies will be filing 8-Ks to tell the world the impact and those have to be filed as soon as the amount is known, so the time period to get the number right is shrunk even more.

Yes, while many CPAs were spending time with family and friends between Christmas and New Year’s Day, a few of our brethren were working hard to figure out the impact of the new tax law on their companies financial results and tell the world.  Which were you?


New Year’s Resolutions

Traditions start when you do something every year, so we are continuing a tradition of listing the top 10 resolutions that all CPAs make and then just as quickly break in the new year.

  1. I will take some CPE every month so by the time December 2018 rolls around I will already be in compliance with my state’s CPE requirements.
  1. I will reread my emails before I send them out to make sure they don’t have mistakes in them.
  1. I will give timely feedback to my staff when they do something well or need to improve.
  1. I will incorporate exercise into my schedule each day no matter how busy I am.
  1. I will say no to a new project, client or request for my time at least once a month.
  1. I will not look at email at least one whole day while I am on vacation.
  1. I will spend 15 minutes at the end of each day clearing my desk and planning so I can start the next day productively.
  1. I will eat lunch with someone else at least 3 times each week. Maybe I can hit resolution #7 too by walking to lunch with the person!
  1. I will not multitask during conference calls so I know what is said and don’t have to ask people to repeat the question.
  1. I will not wish ill will on the members of the FASB despite having to deal with the new revenue and leasing standards!

What other resolutions do CPAs need to make and which ones do you think we will actually be able to keep this year?

2017 in review

As the end of 2017 approaches, I thought it might be fun to look back at the variety of topics I discussed over the past year.

Back in January I went philosophical and talked about how time was the great equalizer in the world and attitude and integrity were the items we each control about ourselves in the world. I concluded the blog series pointing out that freedom, which we all so cherish, is really about the ability to choose, which is integral to all three of the previous topics.

I continued to cover new developments in accounting and auditing standards.  There was a blog about the updated definition of a business; but I also covered how the new revenue and leasing standards might impact processes not directly related to financial reporting such as budgeting.  I looked back on the progress made in dealing with the unique nature of private company reporting, and I brought up some changes in auditing standards around fair value and the use of specialists that might have a noticeable impact on those involved in the financial reporting process.

I spent some time talking about jobs and careers, including my new position in the internal audit group at AT&T.  I pointed out how being a CPA can provide a path to many different positions within a company.  Finally, I talked about the biggest myth of being a CPA – that it’s all about the math.

I also delved into some new topics like Cyber-security which, despite its focus on technology, is often about the human element and basic blocking and tackling like limiting access and using appropriate passwords.  I also revisited some old topics like board and management roles in internal control, pointing out that they have a huge influence on over half of the internal control principles which are in the control environment and risk assessment components.

Finally, we had some fun throughout the year talking about having fun in the office, what emoji you would be, and sharing an occasional top 10 list.  I hope you have enjoyed the blog and I look forward to continue writing it next year.