Are Your Accounting Skills Up To Par?

Are Your Accounting Skills Up To Par?

In an effort to improve the skills of the accounting profession and to keep those skills relevant, the AICPA and NASBA recently reported that they have found major gaps in accounting education.

During the discovery by the AICPA’s CPA Evolution Initiative, they referenced core disciplines needed by accounting professionals, ensuring applicants are being educated and tested on skills they will need in order to be successful in this career. 

The AICPA chose skills they recognize as being essential to an accountant’s career, making note of areas that need to be taught and discussed more in depth.

It won’t come as a surprise that one of the major areas of focus is the importance of technology, and working to offer in-depth instruction on technology in the accounting world.  They found that half of the accounting programs do not address emerging subjects such as governance, cybersecurity, risk management, and other general business risks and related controls. 

They reported that although many universities do offer instruction on data analytics, organization controls, and other related topics, they do not cover these topics at length as extensively as they should in order to help accountants develop better auditing and advisory service skills.

With technology being at the forefront of this initiative, AICPA has started to focus on three main areas within technology:

  1. Technology systems
  2. Data and analytics and manipulation of data
  3. Digital acumen

This includes having a strong understanding of technological trends and how those trends may affect accountants in the future.

The AICPA’s initiative involves changes to the CPA exam which they wish to release in January of 2024, moving the exam to core subjects with an addition of other disciplines with more technology emphasis. 

The AICPA is also working towards supporting the academic world to help close these educational gaps. They are working on developing the CPA Evolution Model Curriculum. This curriculum is not required, but will be available to those who need the support. 

When considering the skill sets of accountants, it is important to not only consider the core requirements and knowledge needed to perform the job, but also skills such as effective communication, adaptability, and the ability to learn and grow.

Since accounting is a people profession, effective communication is an incredibly important skill set.  Unfortunately, a lack of good communication skills makes it incredibly challenging to form strong business relationships and maintain clients. 

Another area is adaptability and the willingness to shift your way of thinking. The accounting profession has faced, and will continue to face, many changes as technology advances, therefore the ability to adapt to change is a skill that is imperative for accountants to learn and master.

As Artificial Intelligence makes certain aspects of the accountants job obsolete, your critical thinking skills and problem solving abilities should always be focused on in order to keep you ahead of the curve.  By committing to your own personal and professional growth, you are setting yourself up for continued success.

Whether you are just starting your accounting career or have spent decades in the profession, one thing is certain – you will always need to fine tune and hone your skills as you roll with the changing times.  Being that trusted advisor means that the public can trust that you are adapting to this ever changing world as much as they are. 

And finally, the AICPA suggests that you stay aware of market trends and be open to the changes that will inevitably occur with the accounting world, committing to developing the skills needed in order to continue to learn and grow as a trusted professional. 

 

Source: https://www.accountingtoday.com/podcast/closing-the-skills-gap-in-accounting

Preparing Your Business for the Post-Pandemic Economy

Preparing Your Business for the Post-Pandemic Economy

As we’re all unfortunately aware, the COVID-19 pandemic has been life altering for many businesses, causing many to close under the pressure.  However, now that the United States has lessened the restrictions that made it challenging to do business, it is time to start considering the actions and planning processes that need to be put in place for a post-pandemic economy. 

While the pandemic is easing up, that also means stimulus money will be drying up with it. Therefore, businesses need to consider what measures they should be taking in consideration of this money no longer being available. 

In order to have any chance of surviving during the pandemic, it was important for businesses to consider their costs.  They needed to determine ways to mitigate certain costs as much as possible until the world opened back up, and they were able to support their clients and customers again.

What many businesses have realized, that generations before us learned in dealing with previous economic and social catastrophes, is the idea that every penny counts.  After years of prosperity, and sometimes excess, businesses have been forced to learn how to do more with less.

This applies to production, processes, services; however it is that a business makes a profit, it is more important than ever to make these areas as efficient as possible. Until the economy fully recovers, cash conservation is key.

Depending on the business, a few other important considerations could be:

  • Having even more effective inventory control to stretch inventory and stock levels to minimize ordering
  • Maintaining consistent collections on goods and services, and restructuring or creating processes to ensure timely collections
  • Offering discounts when invoices are paid early or offering other incentives

For small businesses, owners may want to speak to their lenders.  Some have already turned to using home equity lines of credit to leverage finances while the economy continues to go through post-pandemic changes.

Although the SBA (Small Business Administration) was on everyone’s minds during the pandemic, with EIDL Grants and PPP Loans, the SBA will always be important for assistance to small business owners in this post-pandemic economy.

Thankfully for some businesses, there are other avenues to explore for funding. For example, one of these programs being offered is the Shutter Vendor Operators Grant.  This grant is available for movie theaters, casinos, and non-profit organizations that run events that were highly impacted by the pandemic, as well as the guidelines and restrictions that came along with it. 

No matter what industry your business is in, it’s important to explore industry specific programs that might be available.  There are many that can assist, that business owners may not be aware of.  Not all of these programs were used during the pandemic, but have been permitted to help.

Another thing to consider is investors. There are many investors looking for the right opportunity to invest in various businesses post-pandemic.  Whether it’s industry specific or group specific, such as female owned businesses or minority owned businesses, there are investors looking to help businesses get back on their feet.

Interestingly, one of the issues that became apparent during the pandemic and the shift to a virtual workforce, was that businesses need to consider their space, or their footprint. Where is their space located, how much space do they actually need to run their business, and are employees going to be returning to the office or will they be remaining remote? These are crucial details when considering costs and budgeting for a business’s future.

Another important consideration is having a strong technology infrastructure.  As the pandemic created an even greater dependence on technology, it’s important to address what was necessary then, and what can be implemented now.  Whether it’s now conducting Zoom meetings to cut travel costs, Telehealth visits, or various ordering and pick-up procedures, how businesses adapted to the pandemic world will likely leave a mark on what businesses consider normal operations.

Lastly, financial forecasting will be a key component in preparing businesses for the post-pandemic economy.  Working with an accountant to create three plans for when the economy goes up, down,and flat, will help them to be prepared for whatever the future holds; not only to the United States economy, but the global economy in general.

Obviously no one can see what the future holds, and normal forecasting methods might be difficult to use as we do not know if demand will return to historical rates, but being prepared in the ways that are within a business owner’s control will be hugely impactful.  The key lesson in this all – prepare yourself by remaining adaptable and vigilant.  

Source: https://www.accountingtoday.com/podcast/getting-ready-for-the-recovery

 

Opting Out Of The Advanced Child Credit

Opting Out Of The Advanced Child Credit

As you may or not be aware, The American Rescue Plan, signed into law on March 11, 2021, expanded the Child Tax Credit for 2021 in order to get more help to more families.  The Plan increased the Child Tax Credit from $2,000 per child to $3,000 per child for children over the age of six and from $2,000 to $3,600 for children under the age of six, and raised the age limit from 16 to 17. This payment amounts to $3,000 annually per child aged 6 -17, and an additional $600 (or $3,600 total) for children under the age of 6. The credit is income based for those earning less than $75,000 per year for an individual or less than $150,000 for those filing jointly. These payments are scheduled to begin on July 15th, 2021.

Part of this plan includes a portion of each payment up front in the form of monthly payments. These payments may be up to $250 for each school-aged child, and up to $300 for those children under age 6. The remainder of the credit will be paid upon individuals filing their 2021 taxes.

There is now a new procedure in place that can change parts of this credit if one’s financial situation deems it necessary. The IRS is allowing taxpayers to instead choose to opt-out of receiving the monthly payments in advance. As previously mentioned, this may or may not be necessary depending on a client’s situation. It is important to take a close look at this in order to properly advise clients which steps they should take.

As it stands, the IRS will be looking at both the client’s tax return from the prior year, as well as the number of children for whom the credit was claimed during the prior year. However, as the bill was signed into law this year, there will be differences in how this will work for 2021’s tax returns. 

Instead of the IRS being able to use the previous year to make these calculations, the onus will instead be placed on individuals to reconcile the payments they receive in 2021 and the amount they should have actually received. Payments that amount to more than the client should have received, will need to be repaid.

For that reason, it may be advisable to clients to opt-out of receiving these advanced payments if their income for 2021 is expected to be higher than it was for 2020. Any other circumstances which may also have an impact on a client’s eligibility for the credit should also be taken into account when making the decision to opt-out of the credit.

The IRS’ new tool is located on their portal. Clients only need to choose “unenroll from advance payments”. The portal can be found here:

https://www.irs.gov/credits-deductions/child-tax-credit-update-portal

Source: https://www.mocpe.com/advanced-child-credit-opt-out/

SBA Targeted EIDL Advance and the Supplemental Targeted Advance

SBA Targeted EIDL Advance and the Supplemental Targeted Advance

 

As small businesses all across the country attempt to reopen and recover from the pandemic, the SBA has expanded its reach in the form of an Targeted EIDL Advance and a Supplemental Targeted Advance.

The first thing to know is, if the business did not apply for the EIDL advance in 2020, the business is not a candidate for either the EIDL Targeted Advance or the EIDL Supplemental Targeted Advance.

If the business did apply for the EIDL before December 27, 2020, then it is a candidate to potentially receive the Target Advance and/or the Supplemental Advance. Each requires that the SBA send an email inviting the business owner to apply for these programs.

In addition, both also require the business to be located in a low income community. The SBA has set up a web-based mapping tool to help determine whether the business is in one of the required low income communities or not. If it is, the EIDL Targeted Advance is for those businesses that have 300 or less employees and have at least a 30% drop in gross receipts in any 8-week period.

To qualify for the EIDL Supplemental Targeted Advance, the business first has to be eligible for the EIDL Targeted Advance. It is also by invitation only via email from the SBA. In addition to needing to be located in a low income community, gross receipts must be down 50% in any 8-week period and only applies to businesses that have 10 or less employees.

You can find out more FAQ’s about these SBA programs HERE

Proposed $15,000 First Time Homebuyer Tax Credit

Proposed $15,000 First Time Homebuyer Tax Credit

The proposed $15,000 first time home buyer tax credit made available through the First Time Homebuyer Act is now officially a bill, heading to Congress.  

Under the current verbiage of the bill, this First Time Homebuyer Tax Credit will be available to taxpayers for the lower of 10% of the purchase price of the home, or $15,000.  The home purchased must be the taxpayer’s primary residence and must be occupied for 4 years.  If the home is sold within the 4 year period, a portion of the credit will need to be repaid.  

In addition, in order to be eligible for the $15,000 credit, the taxpayer needs to be a first time homebuyer, or have not owned a home in the last 3 years.  The home being purchased can not be more than 110% of the median purchase price in the area and the bill’s current version applies to homes purchased after December 31, 2020.

Under the current verbiage, this tax credit is mostly available to low to middle income earners with the qualification that their Modified Adjusted Gross Income cannot be more than 160% of the area median income (AMI).  To look up the area median income you can use https://ami-lookup-tool.fanniemae.com/amilookuptool/

In addition, a draft of The Downpayment For Equity Act of 2021 offers a $25,000 grant for first time homebuyers as well.  This grant includes requirements that the taxpayer is a first time homebuyer, first generation homebuyer, and other strict income requirements such as Modified Adjusted Gross Income cannot be more than 110% of the area median income (as opposed to 160% for the Credit).  

Stay tuned as we await whether President Biden will pass both bills offering qualified first time homebuyers the opportunity to alleviate some of the pressure of purchasing their first home. 

More Flexibility For Flexible Spending Accounts

More Flexibility For Flexible Spending Accounts

Due to the pandemic, the IRS has provided greater flexibility to employee benefit plans offering health flexible spending arrangements (FSAs) or dependent care assistance programs.

Under the COVID-related Consolidated Appropriations Act (CAA) and the American Rescue Plan Act (ARPA), these FSA plans now have additional discretion in 2021 and 2022 to adjust their programs to help employees better meet the unanticipated consequences of the public health emergency.

In Notice 2021-15, the IRS responded to unanticipated changes in the availability of certain medical care and dependent care. They recognize that as a result of COVID-19, participating employees are more likely to have unused health FSA amounts or dependent care assistance program amounts at the end of 2020 and 2021.

Notice 2021-15 provides flexibility for employers in the following areas related to health FSAs and dependent care assistance programs:

  • Provides flexibility for the carryover of unused amounts from the 2020 and 2021 plan years
  • Provides flexibility to extend the permissible period for incurring claims for plan years ending in 2020 and 2021
  • Provides flexibility to adopt a special rule regarding post-termination reimbursements from health FSAs
  • Provides flexibility for a special claims period and carryover rule for dependent care assistance programs when a dependent “ages out” during the COVID-19 public health emergency
  • Allows certain mid-year election changes for health FSAs and dependent care assistance programs for plan years ending in 2021

Due to the fact that millions of employees have access to health FSAs and dependent care assistance programs sponsored by employers under cafeteria plans, these changes are important to address with the plan provider. The decision to adjust these employee benefit programs is at the discretion of the employer that sponsors the plan.

Normally the account funds that are not spent by the employee within the plan year, subject to limited grace periods or certain carryover amounts, are forfeited. However, Notice 2021-15 offers employers the option to amend their plans to provide greater flexibility for employees to elect and use these programs during the pandemic without risking the forfeiture of the amounts they have set aside.