The Texas Society of CPAs held its Advocacy Day and Midyear Board and Members Meeting in Austin the last week in January. In addition to visiting with our legislators to remind them of the importance of continuing the Texas State Board of Public Accountancy and CPA licensure in Texas, we got to hear from Mark Peterson, AICPA executive vice president – advocacy, about what we might expect to see coming out of Washington, D.C.
With the major parties splitting control of the House, Senate and the presidency, the likelihood of anything big happening (think Affordable Care Act, Dodd Frank Act or Tax Cuts and Jobs Act that happened when one party controlled all three) is small. But the split leadership does have implications on what we can expect to see or not see in the coming couple of years.
- Democratic control of the House means changes to SOX 404(b) requirements, such as changing the metrics for companies exempt from compliance, are less likely to occur.
- PCAOB will continue to push to make disciplinary proceedings public even though such disclosure could negatively impact due process for affected firms.
- There will be continued interest in anti-money laundering legislation, which sounds fine, except that innocent CPAs may get caught in the crossfire if the legislation is not written well.
- Expect to see a push to make arbitration agreements unenforceable. Whether this is good or bad depends on your perspective, but no matter what your perspective is, businesses, not just CPAs, will be very interested in this issue.
- Immigration is clearly a hot-button issue and questions about how many people with special skills, including backgrounds in artificial intelligence, data analytics and other skills highly sought after by audit and accounting firms, should be allowed to come to the U.S. under special visa programs will likely get caught up in any movement, or lack thereof, on the issue.
- Finally, CPAs wondering what services they can and should provide to legal Marijuana businesses in states where the law has changed might see some movement. Bills have been filed to amend the federal controlled substances act to state that if you comply with state law, you are not in violation of federal law.
Like TXCPA in Austin, AICPA works hard on your behalf in Washington, but nothing can replace the personal touch of a constituent talking to their legislator. If you are interested in any of these issues, contact your representative and senators and let them know how you feel.
While there are a few CPA politicians, many CPAs would rather have a root canal than engage in politics. We want to take care of our clients, manage our businesses and, most importantly, get things done. Most of the time, that works and CPAs can go about their business without really worrying about what is happening in the political arena, but this year is not like most years.
On the national level, CPAs are having to deal not only with significant changes to the tax code due to changes passed by politicians, they are also having to deal with no one at the IRS being able to help with questions. The simple facts are the IRS is caught up in the government shutdown, non-essential employees have not been furloughed and apparently answering questions about the new tax law is not considered essential. I guess we can at least be happy that giving refunds is considered essential, so the IRS will be recalling workers to process those checks and deposits. CPAs may not know what to put in the return, but once the return is filed, our clients will get their refund.
While the need to ask the IRS questions occurs every year, this year is the worst possible year for a shutdown, because no one has ever dealt with these provisions before. There is no other CPA who might be able to help in place of the IRS, because the CPA dealt with the issue in the past. With no one to answer questions, there will be a lot of people flying blind as to how to get things done right until things get fixed.
At the state level, here in Texas, the politicians will decide if they want to retain the Texas State Board of Public Accountancy (TSBPA) and, therefore, your CPA license. If the Board is not retained, then Texas will have no state-licensed CPAs. The good news is the sunset commission has recommended keeping TSBPA. The better news is the governor, lieutenant governor and speaker of the House seem to be getting along and focusing on mainline issues rather than controversial ones. The hope is that such cooperation continues and we don’t go through what doctors did two years ago when it took a special extended session to get the Medical Board retained so doctors could continue to be licensed in the state.
This might cause you to wonder how CPAs can do their job and deal with politics, but that is where the Texas Society of CPAs (TSCPA) helps. TSCPA advocates for CPAs with politicians every day, so CPAs can focus on their clients and businesses. If you want to see what TSCPA is doing for you, you can follow the Tax Policy Committee on the TSCPA Exchange to see how they are advocating for you with the IRS. At the state level, you can follow what’s going on at the legislative session by reading Last Week in the Legislature published every Friday. As the saying goes, just because you don’t take an interest in politics doesn’t mean politics won’t take an interest in you, but in the case of CPAs, we have TSCPA on our side to help when politics gets interested in us.
What will 2019 bring?
First off, the new lease standard is in effect for public companies and the revenue standard is now mandatory for private companies. And the big changes aren’t over. While the biggest changes from the new financial instruments and credit loss standards are reserved for companies in the financial services industry, all companies will have to spend time in 2019 preparing to deal with some aspect of the changes required by the standards.
2019 will also be the first year of filing taxes under the new rules passed at the end of 2017. There will be a lot of confused taxpayers learning that previous deductions are no longer allowed or necessary. Seeing that doubled standard deduction in an actual return will make many people realize that tracking interest expense, state taxes and charitable deductions is no longer needed. At first, people might be upset, but once they realize that completing their taxes is easier, I think many people will find even more to like about the tax changes.
Of course, CPAs won’t be dealing with those easy tax returns. CPAs provide services to clients with more complex tax situations and personal businesses. They will be dealing with new depreciation rules, new limits on interest deduction, operating loss deduction changes, and new BEAT and GILTI rules impacting any business that operates internationally, which, of course, can be almost any business in our connected world these days.
The audit report will change to include Critical Audit Matters or CAMs. The concept of providing more information about the audit has been implemented in other countries to considerable success. CAMs bring increased relevance to the audit report and have the beneficial side effect of increasing pride in the auditors themselves.
And finally, financial planners will likely have to deal with increased volatility and spooked clients in 2019. The markets ended 2018 in one of the most volatile times in the past decade and 2019 looks to pick up where 2018 left off. Financial planners will definitely be earning their money this year keeping clients calm and invested for the long haul.
2019 will definitely be “interesting times,” but that is what makes being a CPA such fun.
New Year’s is nearly upon us and many people start thinking of resolutions to make. Resolutions can be about anything, but often resolutions are focused on some form of personal improvement – be it physical, spiritual or mental. People want to change for the better and while we often joke about the failure to carry through on resolutions, people do successfully change for the better. I saw a quote recently from Anne Bronte that stated, “It is never too late to reform, as long as you have the sense to desire it and the strength to execute your purpose.”
I wonder, though, if that is possible in today’s world. People bring up something someone said when the person was young or over a decade ago and imply that those words are what the person really believes even today. Social media enables the research, but the core issue is do people really believe other people can change. If people believe that the past is who someone is today, then people must also believe no one can ever change. No one can go from being a persecutor of a cause to the most prolific advocate of that cause. No one can rise from failure as a young adult to being a leader to stop tyranny in the world. No one can go from joining a profession because it is about numbers and turn into a prolific writer who produced over 400 blogs.
I do believe people can change and I also believe that the only way to change is to have a discussion. That means people need to be willing to share thoughts, words and beliefs, but doing so makes one vulnerable. If people are attacked for asking insensitive questions because they do not know any better, then no one will ever be able to change. In order to really make society better, we have to change the way people pile on in social media. Instead of sitting back and being relieved that the trolls are not attacking you, we all need to take action and tell the trolls to go back into their holes and allow people to have open, honest, learning conversations, because that is the only way people will change and make the world a better place.
Maybe that is the resolution we all need to make for 2019.
“It’s the most wonderful time of the year,” and the time when children (and adults) write letters to Santa Claus in hopes of getting a couple of really cool items Christmas morning. In that spirit, I thought we might have a little fun putting together a CPA wish list for 2019.
10) A regular session reapproval of the Texas State Board of Public Accountancy.
9) An increase in the number of accounting graduates taking the CPA exam.
8) Legislation eliminating the need to file state tax returns when someone works in a state for one day.
7) A Congress that funds the IRS so the help line can provide help instead of courtesy disconnects.
6) A Financial Accounting Standards Board that finally eliminates a disclosure without adding any in the process.
5) An IRS delivering regs that make sense and explain what Congress meant in the new tax law.
4) States and territories passing individual and firm CPA mobility.
3) Computer systems that don’t crash on April 14.
2) Clients delivering all needed documentation accurately and on time.
1) A beautiful spring day – on April 16!
I hope everyone has a great holiday season!
At our November meeting, the Texas Society of CPAs (TSCPA) Executive Board continued to focus on how TSCPA needs to evolve to better help members achieve success. The Board heard about, and provided input on, a number of initiatives, including:
- Membership investment;
- Partnership between the state and chapter organizations;
- Sunset and legislative activities.
Progress continues to be made on maintaining the Texas State Board and licensing of CPAs in Texas. That would seem to be a non-event to many, but there is a growing push to reduce the number of licensing boards across the country and too often, those pushing that agenda sweep up learned professions such as doctors, lawyers and CPAs in their efforts to eliminate state licensing requirements across a large swath of jobs. Usually, those pushing for reduced licensing state they never intended to include CPAs in their efforts, but TSCPA has to keep an eye out on the specific language proposed in bills to ensure the change in law is not overly broad and includes CPAs.
All TSCPA members are members of both the state and a local chapter organization. State and chapter leadership realize that providing value to members is a joint responsibility. The task force working on that partnership is exploring ways for both organizations to better coordinate their activities and resources to produce better results for our members. Similar efforts are being made on the CPE front to better coordinate course offerings by the state and chapter organizations and to fill different needs for large, medium and small chapters.
Finally, I’m excited about the proposed changes on how your professional organization will brand itself to you as members and to the public at large. We are all proud to be Texas CPAs and the new brand will focus on both of those concepts. Please stay tuned, as there will be more to come on that front in the next few months.
While ghosts and goblins may scare most people, professional accountants aren’t easily frightened by such things. Instead, our list of things that wake us up in the middle of the night in a cold sweat is more like this:
10) Having to tell the salesperson that the contract they got signed at 11:59 p.m. on December 31 won’t get booked as revenue because we had not actually delivered any products or services yet.
9) Congress announcing yet another effort to “simplify” the tax code.
8) A client walking in with a shoebox … because we know it is full of receipts and probably only half the information we need anyway.
7) The CFO walking into our office saying they just heard a great presentation from a software vendor that is going to solve all our problems.
6) Realizing all those rounded numbers are off by one when we add them up and compare them to the total at the bottom of the column.
5) Turning on our computer and seeing that blue screen of death … on April 14.
4) Hearing FASB and the SEC say they are starting a project to reduce disclosures because we all know they will eliminate three paragraphs no one was disclosing anyway, but realize that five new pages of information would be very useful to investors.
3) Hearing procurement proudly announce they have solved the current year budget problem by getting our vendor to defer the payment until the next year even though we will get the products and services right now.
2) Realizing it is December 30 and we haven’t completed that pesky ethics training requirement yet to maintain our CPA license.
1) October 15 … because tax deadline day is way scarier than Halloween.
I hope you had a great time on Halloween and maybe a little laugh enjoying this blog.