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Starting salaries in public accounting are projected to increase between 2.3% and 5.8% in 2023 based on data from the 2022 and the newly released 2023 Robert Half Accounting & Finance Salary Guide, according to Going Concern.

The salary guide features salary data for jobs in 35 categories within accounting and finance. In the public accounting category, Robert Half provides projected 2023 starting salaries for eight positions: four in tax services and four in audit and assurance services.

Comparing starting salary projections from Robert Half’s 2022 and 2023 salary guides, Going Concern determined how much starting pay is expected to increase next year for each of the eight positions featured.

Tax services

Audit and assurance services

In its annual salary guide, Robert Half provides starting pay ranges by percentile, based on a candidate’s experience. For the 2023 salary guide, there are three salary percentiles with the following descriptions:

Below are the projected starting salaries in public accounting for 2023, according to Robert Half:

Senior Manager/Director Tax Services$118,500$146,250$175,750
Manager of Tax Services$92,750$112,750$131,000
Senior Tax Associate$65,250$78,500$90,500
Tax Associate$51,250$63,000$72,750
Senior Manager/Managing Director, Audit/Assurance Services$116,750$144,500$167,500
Manager, Audit/Assurance Services$80,000$100,000$114,000
Senior Associate, Audit/Assurance Services$57,250$72,000$82,000
Associate, Audit/Assurance Services$48,500$59,750$68,750
Source: Robert Half

Robert Half also revealed that 51% of senior finance hiring managers plan to add new staff this year. The staff and recruiting firm also noted that firms face a steep challenge in growing their teams to expand business initiatives, as 54% of managers said they are seeing increased quits at their company.

“Flexibility might help. Only 27% of professionals looking for a job in finance and accounting are considering fully in-office roles, but 54% said they are required in the office full time,” Robert Half stated in the salary guide.

By Christina Quaine.

A recent PwC survey found that rising cybersecurity threats are the number one concern for CEOs around the world. It’s not surprising, as malware, ransomware, and phishing scams that provide criminals with access to sensitive customer and financial information can result in hefty financial loss and do irreparable damage to a firm’s reputation.

As firms look to better protect themselves, payments remain a key area of concern. The 2022 AFP Payments Fraud and Control Survey found that 71 percent of organizations were victims of payments fraud attacks or attempts last year. Checks, still a primary payment source for many businesses, were the payment method most impacted by fraudulent activity, accounting for 66 percent of attacks.

Firms have powerful allies at their disposal to help protect against the growing threats—the finance and payments team. These professionals can leverage advanced technologies, including artificial intelligence (AI), and security best practices to keep a watchful eye and ward off potential attacks.

Here’s a look at just how they can serve as an effective layer of defense, strengthening protection in their organizations from cybercrime that can have devastating effects:

Take a 360-degree view of the threat environment and understand the risks

Understanding cybersecurity risks and generating awareness of them is the first step in training the finance and payments teams to help protect against them.

PwC reports that cybersecurity attacks haven’t just multiplied, they’ve become more sophisticated, and ransom demands steeper. Remote and hybrid work environments have put organizations at increased risk for security breaches, as people are spending more time on their computers and often working on less secure networks and personal devices.

The record high labor shortage, including too few cybersecurity professionals to provide protection, is also to blame for creating a riskier business environment. Eighty-five percent of those finance pros surveyed in a global cybersecurity study by Trellix, said they believe the current workforce shortage is making it difficult to secure increasingly complex information systems and networks.

Which department is most at risk? AFP’s 2021 Survey shows that Accounts Payable (AP) departments are among the most susceptible. Fifty-eight percent of respondents report that their AP department was targeted by BEC fraud, a convincing approach where a criminal sends an email to an employee, pretending to be a senior executive with the company, and instructing the employee to approve a payment or release client data. Employees often fall for the scam, unless they are made aware of them and on guard.

Rely on advanced technology to protect financial information and transactions

The majority of financial institutions surveyed by software provider VMWare plan to protect against the threats by increasing their cybersecurity budget by 20 percent to 30 percent this year.

One powerful place to allocate budget is to the team responsible for managing sensitive customer and financial data and handling mission critical financial transactions, including invoicing and payments—the AP team. Antiquated, error-prone tools and processes like spreadsheets and paper checks expose organizations to greater risk.

Automating risky manual invoicing and payments processes with AI-powered AP solutions can provide the controls and transparency organizations need to better detect fraudulent threats. It also enables organizations to offer vendors e-payments, a far safer payment method than paper checks.

Cloud-based automated AP solutions protect sensitive data by storing it in safe, electronic formations and putting controls in place to assure appropriate access to it. Embedded within the solutions, AI provides 24/7 fraud protection and malware and intrusion detection. It can identify, for instance, important missing invoice details, track unforeseen rises in invoice volumes, trace after-hours logins, and make it difficult to forge documents.

The greater visibility also helps the finance team identify past payment transactions and behavioral patterns to better forecast future transactions.

Establish security protocols and training procedures to support the finance team’s protection efforts

In addition to creating awareness of risk and phasing out legacy equipment and processes that are becoming increasingly susceptible, organizations can protect against cybercriminal activity by establishing a strong safety culture.

That means sharing news updates and flagging pervasive issues, so workers are on guard, well prepared, and understand that safety and security are top priorities.

Together, departments can create and share policies and procedures that clarify expectations and define security protocols. Effective safety protocols include requiring remote workers to use company-owned devices, VPNs, and secure internal networks and firewalls to protect sensitive information; regularly updating company-owned software with security patches; and never leaving devices unattended.

Looking ahead

Alarmingly, more than half of respondents in the PwC’s 2022 Global Digital Trust Insights survey expect to see an increase in cyberattacks. Undoubtedly, criminals will continue to take advantage of vulnerabilities as they emerge, evolving their methods and targets to outsmart prevention strategies.

While it’s impossible to predict what new tactics may emerge, proactive prevention strategies and trusted technology partners, remain the best defense.


Christina Quaine is chief information security officer and senior vice president of technology operations for AvidXchange. She is responsible for the company’s cyber security program, leading efforts to reduce the risk of unauthorized access to sensitive data and personally identifiable information.

By Jo Constantz, Bloomberg News (TNS)

Almost 80% of remote workers believe their employers would fire them if they said “no” to a return-to-office mandate.

However, nearly 60% of employers say they’d be content with employees resigning rather than returning to the office. That’s according to a survey of 800 workers and 200 business leaders by OSlash, a productivity software company.

Big-name companies like Apple Inc. and Peloton Interactive Inc. are leading the charge, setting Labor Day as their latest deadline for corporate employees to be in the office at least three days a week. The push has driven a wedge between workers and their bosses, with many rank-and-file employees reluctant to give up the flexibility and autonomy they enjoyed during the pandemic.

Stories of employee resistance are circulating on social media: One of the most popular posts on the subreddit r/antiwork this month described a worker replying all to a company-wide message with, simply, “no.” On Monday, New York Times offered employees branded lunchboxes to welcome them back to the office. The gesture fell flat as more than 1,200 pledged to work from home to protest the mandated return and to pressure the company to negotiate with the union over returning to the building.

For employers who want to sweeten the deal, more money, flexible scheduling and free food were some of the most popular incentives workers said would lure them back, OSlash found. Alternatively, four out of five of employees would be happy to take a pay cut to continue working from home, with Gen Z workers the most willing to do so.

Employers polled say they’re prepared to offer flexible scheduling, with 60% saying they would offer hybrid options to employees disinclined to return to in-person work. While 20% said they would continue to let their employees work remotely if challenged, almost the same portion said they would fire workers who refused to return to their desks, making outright refusal a risky proposition. At the same time, over 10% of business leaders admitted using a return-to-the-office mandate to terminate employees without having to lay them off.

For those still resisting: the survey found that more than one-third of employers see remote workers as more expendable than those on site. 

With assistance by Alexandre Tanzi


©2022 Bloomberg L.P. Visit Distributed by Tribune Content Agency LLC.

Enterprise-grade storage is the lifeblood of cloud computing. As a result, global businesses have an insatiable appetite for data storage, and it is estimated that there will be over 200 zettabytes of data by 2025. This eye-watering amount demonstrates the enormous demand, especially considering that a zettabyte equals one billion terabytes.

Since the Covid-19 global pandemic, offsite storage has become the go-to place for data storage. Demand for centralized storage services like Google Drive and Dropbox has grown exponentially.

Join us as we discover the advantages and disadvantages of offsite storage, learning why demand is so high along the way.

What is Offsite Storage?

Offsite storage is storage hardware relocated at a remote, geographically disparate location. Popular examples include:


Let’s jump straight into the pros.


So that is our top pros and cons for offsite data storage. We are witnessing a paradigm shift towards cloud computing, and offsite cloud storage is making a real difference for business and personal users worldwide.


Richard Bailey is the Lead IT Consultant at Atlantic.Net, a growing and profitable cloud hosting company that specializes in HIPAA compliance.

The Internal Revenue Service has announced that per diem rates will increase starting Oct. 1, 2021. For lower-cost locations of business travel, the daily per diem rate will be $204. The high rate will be $297. The new rates will be effective from Oct. 1, 2022, through Sept. 30, 2023.

Per diem reimbursement can be offered to employees when they are traveling in lieu of tracking specific expenses for lodging, meals and ordinary incidental business expenses. The per diem allotments can then be claimed as expenses by the business on its taxes. Per diem rates can vary based on the locality of the travel within the United States, as some areas have higher costs. This high-low substantiation method allows for higher expensable rates.

Per diem rules further restrict what portion of the daily allowance is meant for meals. For low cost travel destinations, that amount is $64; for higher-cost locations, it is $74 per day. Those in the transportation industry have allowable rates for means and incidental expenses of $69 per day for U.S. locations, and $74 for locations abroad.

The list of which cities and regions qualify as high-cost or low-cost is revised periodically and is accessible at:

By Bill Estep, Lexington Herald-Leader (TNS)

A Central Kentucky accountant who created fake financial documents used in fraudulent applications for coronavirus relief loans has been fined $30,000.

Tammy Jo Goodwin, of Nicholasville, was fined after she pleaded guilty to conspiracy to commit wire fraud. She also will be on probation for five years. The sentence includes a requirement to perform 200 hours of community service and 180 days of home detention.

She admitted she prepared fake payroll and tax documents for Randall “Rocky” Blankenship Jr. to use in applications for funding which Congress had approved to help businesses with the economic downturn caused by COVID-19, according to court documents.

Blankenship had already received a $750,000 loan through the Paycheck Protection Program for his business, KY Bluegrass RV and Camping LLC, when he submitted applications for more loans in the names of four shell companies, according to Goodwin’s plea agreement.

The companies had no employees, but Blankenship claimed they had significant payroll costs and asked Goodwin to prepare documents to support the false claims, according to court records.

Blankenship received a total of $1.3 million in loans. Not all the applications used documents from Goodwin.

He used the money for a vacation property in South Carolina, improvements to his farm, cash for himself and to feed his gambling habit, according to a federal sentencing memorandum.

U.S. District Judge Karen C. Caldwell sentenced Blankenship to three years and six months in prison and fined him $30,000.

He sold his business to repay the coronavirus loans, according to a court document.

Blankenship paid Goodwin just two-tenths of 1% of what he received through fraud, according to a sentencing memo by Assistant U.S. Attorney Paul McCaffrey.

That would have been about $2,600.

The prosecutor said Goodwin had led an otherwise law-abiding life, been in a relationship since 1985, run her own business for almost 30 years and taken on the responsibility of raising a grandson.

“The government has not been able to answer the question of why this Defendant, with a successful small business and stable personal life, would join a criminal conspiracy with a rogue like Blankenship for almost no personal financial benefit,” the sentencing memo said.

Caldwell sentenced Goodwin on Monday.


©2022 Lexington Herald-Leader. Visit Distributed by Tribune Content Agency LLC.

Randy Johnston and Brian Tankersley, CPA.CITP, CGMA review DoMore, a CRM and operations management platform that provides solutions and operational tools they need to succeed.

Click here to go to the podcast page.

Accounting firm Topel Forman L.L.C. has affiliated with Avantax Planning Partners, Avantax’s employee-based RIA (registered investment advisor) to provide comprehensive tax-focused financial planning and wealth management services to clients. Based in Chicago, Topel Forman is a full-service, 120-person public accounting firm whose services include tax, audit and advisory.

Topel Forman chose to affiliate with Avantax because of its proven track record working with accounting firms, the firms’ similar cultures, and because Topel Forman viewed partnering with Avantax as the most optimal and efficient way of introducing financial planning and wealth management services to their clients.

“Wealth management really is the next logical step in enhancing our client relationships and delivering value to clients for a firm like ours, and while we considered creating it on our own, we’ve seen the difficulty other firms had trying to do it, so we thought, what better way than having a partner with a system that’s been proven successful in our industry,” said Topel Forman Partner Robert Naselli. “During our due diligence I spoke with plenty of people, including accounting firms already working with Avantax Planning Partners. To us, with Avantax’s robust back office, the tried-and-true systems in place, and all the back-office support they have, it just made sense for us.”

Avantax Planning Partners was born from a CPA firm, working almost exclusively with accounting firms nationwide. The company provides a turnkey financial planning and wealth management model, honed during the past 30 years, to accounting firms nationwide.

“Topel Forman is a terrific fit with Avantax Planning Partners because, like us, they want to continue delivering great value to their clients, always keeping clients at the forefront, now in an advisory model,” said Louie Rosalez, President of Avantax Planning Partners. “As with all our affiliates, a devoted and experienced Avantax planning team backed by our significant back-office capabilities will support Topel Forman as they help clients make the most important decisions of their financial lives.”

Despite having upwards of 120 staff and partners, Naselli said the independent firm has kept its family feel while growing. Topel Forman provides high-level talent and expertise clients expect from a larger firm while maintaining a boutique firm’s accessibility and collaboration where partners work with clients every day.

“Topel Forman and Avantax align so incredibly well when it comes to culture, business strategy, and how we serve our clients and business partners,” said Todd Mackay, President of Wealth Management at Avantax. “Avantax presents a significant value to accounting firms looking to provide financial planning and wealth management services because we understand how accounting firms work and how they serve clients, and we have the tools, knowledge and decades of experience to partner with them seamlessly, and that puts Avantax in a class by itself.”

Naselli echoed Mackay’s viewpoint, saying: “We wanted to add financial planning and wealth management because we want to keep building on the trusted relationships we have with our clients. We see more value in adding holistic planning so we can continue to be our clients’ most trusted advisor – for Topel Forman, this is a natural progression in the client relationship.”

The advisory CPA firm Baker Tilly US, LLP (Baker Tilly) will acquire tax consultancy firm True Partners Consulting, LLP (TPC), effective Nov. 1.

Known for their high-end tax services, TPC is especially strong in corporate tax, serving technology startups, and public and private enterprises. This complements Baker Tilly’s strong corporate tax talent. The combination will also bring Baker Tilly a new capability in unclaimed property.

“TPC has incredible talent and a market reputation for excellence,” said Craig Weaver, Baker Tilly Managing Partner – Tax. “Together, we have a shared drive to enhance the client experience through technology.”

“Baker Tilly brings substantial resources and capabilities to TPC’s clients – and greatly expanded opportunities for our team members,” said TPC CEO Tim Costello. “We have always been focused on the future, and we look forward to continuing that focus on a larger scale.”

Geographically, TPC deepens Baker Tilly’s tax presence in major markets across the U.S., including Chicago, Boston, Dallas, New York Metro, Silicon Valley and Los Angeles. The combination also expands Baker Tilly’s coast-to-coast footprint with locations in Tampa and Atlanta.

Allan D. Koltin, CEO of Koltin Consulting Group, who advised both firms on the combination, said, “TPC is well-known in the tax space: they know it inside and out. Baker Tilly’s strategy and client service philosophy combined with its purpose to unleash and amplify talent emerged as the natural choice to catapult TPC’s future-forward vision.”

TPC’s 210 professionals will join Baker Tilly. Learn more about Baker Tilly’s tax services at

By Ane Ohm.

While many are tempted to delay addressing the new lease accounting standard until the last possible moment, your life will be easier if you learn what to do – and what not to do – sooner rather than later.

This article outlines the top five mistakes we’ve seen when it comes to implementing the new lease standard so you can avoid these challenges for your organization or your clients.

Allow sufficient time to analyze leases, especially real estate leases

Office space and other real estate leases often carry the largest dollar value and will be the most complex leases within an organization. Because these are likely to have a material effect on your balance sheet, you should allow plenty of time to analyze these leases. If you want to minimize your lease liability and your lease contract includes nonlease components, you have extra work to calculate the breakout between lease and nonlease components.

First, you have to identify whether nonlease components exist. Commonly, a nonlease component might be the fee for common area maintenance when renting office space.​ Parking is another nonlease component.

Another example of a nonlease component is a service contract where a truck is operated on behalf of a lessee. While the truck itself may be a lease (see below for more information about embedded leases), providing a driver, maintenance and gas are nonlease components.

Costs related to securing the leased asset itself are considered a lease payment for classifying and measuring the lease. For example, a nonrefundable upfront deposit is a lease component.

As you can see, the intent of lease-related payments must be analyzed in the context of each lease to determine if it is a lease component, nonlease component or neither. This is because ASC 842 is a judgment-based standard. As such, the standard does not provide a definitive list of lease and nonlease components because it could never be complete or make sense in all circumstances. Where parties are creative with their lease terms, the initial determinations are more difficult.

With that said, we offer the following as a good starting place when considering how to group lease-related payments.

Likely to be Lease Components

Likely to be Nonlease Components

Not Likely to be a Lease Component or a Nonlease Component

Once the lease and nonlease components are identified, the lease standard requires payments to be allocated between the components based on available stand-alone pricing, not just the values provided in a lease contract.

Additionally, it’s important to identify the correct lease term when renewal options and termination clauses exist. Based on what you know now about your organization, are you reasonably certain to exercise a renewal option or a termination clause? What matters is your economic incentive to remain or terminate, and inaccurately identifying the length of the lease can result in a material misstatement on your balance sheet.

It’s all leases

One of the first and most common questions we receive on the new lease standard is, “But wait, is my {insert anything} lease included in this standard?” It might be a vehicle, a piece of equipment or land. Whichever it is, my response is a resounding, “Yes.”

The standard offers you the ability to elect a practical expedient to exempt leases that are less than 12 months. Other than that, there is no explicit exemption for any lease type, nor is there any explicit allowance for materiality under ASC 842.

In other words, if you have a contract that meets the definition of a lease, it must now be recorded on the balance sheet. This means, all leases must be recognized as both an asset and offsetting liability for future lease payments.

Watch out for hidden leases

Because all leases must be recorded on the balance sheet, identifying embedded leases is more important than ever. Many organizations are unaware that certain service, outsourcing and other contracts must now be analyzed for assets that could be classified as a lease.

A service contract requiring an outside vendor to use equipment on your behalf does not automatically result in an embedded lease. That determination is driven by the nature and use of the equipment in the service contract. If the vendor dedicates equipment to your specific production needs, then you might have an embedded lease. If the vendor transports items for you and specific vehicles are dedicated to your organization, you also might have an embedded lease. You must understand – and document – the underlying nature of the arrangement in order to determine if you have an embedded lease.

Don’t underestimate how long it will take to implement the standard

We are hearing that implementing the new lease standard is taking about three times longer than expected and therefore costing three times as much, especially when done with spreadsheets.

With the changes brought on by these new lease considerations, many companies find that identifying and analyzing their leases require more resources and expertise than they have available. Don’t underestimate the requirements for this initial step. In fact, you may want to consider engaging outside advisers from the start to avoid errors and higher costs after implementation.

As accountants, we are often tempted to use spreadsheets for any calculations. Due to the complexity of the required footnote disclosures, creating a lease accounting spreadsheet is time-consuming and at risk of being inaccurate. If you would like to reduce your time to implement the new standard, easy-to-use software is the way to go. Big side benefits are the availability of SOC reports to provide confidence in calculations, secured data, version control, audit trails . . . the list of benefits is long.

Leases can’t have a big impact on my business, can they?

The largest business impact we’ve seen is on banking relationships. For any organization that has to comply with covenants for a bank loan, adding a significant liability to the books can affect how a bank considers credit availability and borrowing rates.

You might be thinking, “Yes, but that lease liability was part of my organization all along. Why would this change anything?” And you’d be correct: your organization hasn’t changed with the implementation of a new lease accounting standard.

At the same time, your financial institution now has more information about your lease portfolio, and we’ve been told by some banks that this could be an opportunity for them to adjust certain client relationships. We’ve also been told by those banks that early communication about the impact of the coming lease standard on financial statements is the best way to mitigate any effect it might have on the banking relationship.

There are many challenges that exist when implementing the new lease standards. However, looking at what other firms and organizations are doing well and not so well should provide valuable insight when it comes to correctly implementing lease standards for your clients.


Ane Ohm is co-founder and CEO of LeaseCrunch, a cloud-based lease accounting software company.

Friedman LLP settled charges with the Securities and Exchange Commission on Sept. 23 for what the SEC called “improper professional conduct” for failing to comply with the standards of the Public Company Accounting Oversight Board while conducting audits of two public companies from 2017 through 2020.

As part of the settlement, Friedman will pay a total monetary penalty, including fines and other costs, of more than $1.5 million to the SEC.

Earlier this month, Friedman officially merged with top 20 firm Marcum, which establishes Marcum as a top 12 firm with approximately $1 billion in annual revenue and a team of more than 3,500.

According to the SEC’s order, in its audit of iFresh Inc. for fiscal years 2017 through 2020, Friedman failed to design and perform audit procedures that would have detected numerous undisclosed related-party transactions by iFresh.

The SEC charged iFresh last May with repeatedly filing materially inaccurate financial statements that failed to fully disclose related-party transactions, specifically alleging that iFresh engaged in undisclosed transactions with entities that were either controlled by the CEO of iFresh, Long Deng, or owned by Deng’s brother. The SEC is seeking a permanent injunction against iFresh and Deng, disgorgement with prejudgment interest, and a civil penalty. The SEC is also seeking an officer and director bar against Deng.

The SEC found that Friedman did not exercise professional skepticism during its review of the workpapers and failed to recognize red flags that indicated undisclosed related parties. Friedman also failed to obtain sufficient appropriate audit evidence, respond to fraud risks, and perform procedures to identify related-party transactions during its audits of iFresh.

In its audits of another public company, which not named in the SEC’s order, Friedman did not exercise professional skepticism and due professional care, and failed to obtain sufficient appropriate audit evidence in connection with multiple transactions and relationships it encountered during its audit of that company. Friedman also failed to properly audit related-party transactions made by that company.

In addition, the SEC said that Friedman failed to design, implement, and monitor an adequate system of quality control, and the firm failed to adopt and implement adequate policies and procedures regarding audit documentation.

The order against Friedman finds that it engaged in improper professional conduct within the meaning of Section 4C(a)(2) of the Securities Exchange Act of 1934 and Rule 102(e) of the SEC’s Rules of Practice, and violated Section 10A(a)(2) of the Exchange Act and Rule 2-02(b)(1) of Regulation S-X.

Without admitting or denying the SEC’s findings, Friedman agreed to be censured, implement undertakings concerning the training of its staff, and pay disgorgement of $524,138, pre-judgment interest of $40,574, and a fine of $1 million.

According to a new report from Randstad USA, finance and accounting professionals remain in the driver’s seat of the labor market, with demand rising for roles like financial analysts and staff accountants. Other positions requiring similar skills that are especially in demand include accounting managers, controllers, and payroll coordinators/clerks.

Randstad’s 2023 Finance & Accounting Salary Guide found that demand for these roles is most acute in California, Texas, New York, Florida, Illinois, North Carolina, Ohio, and Georgia. Overall, there was a high regional variance between average salaries for finance and accounting professionals, which can be explained by variations in the cost of living and the fact that employers are offering higher salaries to attract workers back into the office in some markets. The report found that salaries are highest for finance and accounting professionals employed in San Francisco and Los Angeles (+64.8% and +57.6% above the national average, respectively) and lowest in Little Rock and Kansas City (-8.0% and -6.1% below the national average, respectively).

“Today’s labor market may be in flux, but we know that high-skilled professionals in specialized finance and accounting positions will always be in demand by companies in all industries, no matter the economic context,” said Dominic Levesque, President, Tatum and Randstad Office Professionals. “In a market like this, though, it is more important than ever for companies to leverage data in their decision-making processes and anchor their salary decisions in the overall market even as they consider other benefits to attract top talent.”

The 2023 Finance & Accounting Salary Guide supports executives and hiring managers by providing new, accurate data they need to make informed choices for this specialized industry in an uncertain economy. This new report digs deeper into the most pressing trends and concerns that the finance and accounting industries face today and in the future.

The guide also provides an in-depth analysis of the trends driving changes in compensation and benefits during this unprecedented labor environment. It underscores that finance and accounting skills – which help companies plan ahead and translate evolving markets – remain in demand and are generally recession-proof.

Other key findings include:

To read the full report and see a summary of its findings, click here.

There is good news and bad news contained in a new report from the Treasury Inspector General for Tax Administration (TIGTA) about the IRS’s handling of advance child tax credit payments to taxpayers last year.

First, the good news: In its audit—which was initiated to assess IRS processes and procedures to ensure that child tax credit advance periodic payments were accurate and made to only those taxpayers who met qualification requirements—TIGTA found that the IRS correctly sent more than 175.6 million payments to recipients, totaling approximately $75.6 billion, between July and November 2021.

Now the bad news: TIGTA also found that 3.3 million payments, totaling more than $1.1 billion, were sent to 1.5 million taxpayers who should not have received the money. In addition, the IRS did not send 8.3 million payments, totaling about $3.7 billion, to 4.1 million eligible taxpayers.

The American Rescue Plan Act of 2021, which was approved by Congress and enacted on March 11, 2021, expanded the child tax credit and authorized monthly payments, with differing amounts, to eligible individuals and families based on their adjusted gross incomes and, if they have kids, their children’s ages.

The first monthly payments were issued on July 15, only four months after the law was enacted, and ended before January 1, 2022. As of December 2021, the IRS had issued 216.9 million payments, totaling $93.5 billion.

While mistakes were made by the IRS, TIGTA did praise the tax agency for readying itself for this “significant undertaking” in a short period of time:

Overall, the IRS’s efforts to implement this legislation directly resulted in assisting millions of taxpayers in obtaining advance Child Tax Credit payments. As stated previously, the IRS deployed the first release of the Child Tax Credit Update Portal on June 21, 2021, and issued the first monthly payments on July 15, 2021, only four months after legislation was enacted. Accomplishing this required a significant undertaking on the IRS’s part to develop processes/procedures to determine eligibility, compute payment amounts, and develop an online portal and non-electronic assistance options for taxpayers to provide the IRS with updates to key information used to compute the amount of payments.

Of the taxpayers who erroneously received advance child tax credit payments, TIGTA said there were instances in which a dependent did not meet age requirements, was deceased, or was claimed on another tax return.

TIGTA said in the report:

During the course of our audit, we independently identified taxpayers who were eligible for advance Child Tax Credit payments. This was done to allow us to then evaluate whether the IRS correctly issued advance Child Tax Credit payments to only those individuals who were eligible. When we identified instances in which taxpayers received erroneous advance Child Tax Credit payments, we immediately notified IRS management to determine the cause of the erroneous payment, and more importantly to ensure that they took action(s) to prevent additional advance Child Tax Credit payments from being issued to ineligible taxpayers for the subsequent monthly payments.

TIGTA said it used the same approach to identify taxpayers who were eligible to receive an advance child tax credit payment but had not been issued a payment by the IRS. For the July and August 2021 payments, TIGTA said it “immediately notified IRS management to determine the cause of the nonpayment and ensure that action(s) were taken to send payments to eligible taxpayers.”

In its official response to TIGTA’s findings, the IRS highlighted its 98% accuracy rate during the limited timeframe provided. The tax agency added that “[t]hese achievements were accomplished while the IRS was addressing challenges associated with the coronavirus-19 pandemic on in-person processes and while implementing retroactive legislation that affected tax year 2020 returns after the filing season was underway.”

The IRS said it worked closely with TIGTA audit staff “who provided near real-time analysis and issue identification at frequent and regular intervals.”

Many people who received payments they should not have gotten were required to pay the money back on the 2021 tax returns they filed in early 2022, the Wall Street Journal noted.

Similarly, people who did not receive the advanced payments during 2021 could claim the full amounts they were eligible for on their tax returns, though the lack of payments may have affected them during 2021. This group included people with taxpayer identification numbers that are provided for people without Social Security numbers.

Oracle NetSuite has announced a series of new product innovations to help organizations run more efficiently and increase the bottom line. The latest NetSuite innovations include an AP (accounts payable) automation solution that can increase the accuracy and speed of processing bills and making payments; a new CPQ (configure, price, quote) solution that helps accelerate and simplify the sales process; a new workforce management solution that can streamline scheduling, time tracking, and wage calculations; and a new shipping solution that helps bring added efficiency to warehouse operations.  

In addition, NetSuite has introduced new automation and analytics. These can give organizations the insights and control to increase productivity and profitability by enhancing the financial, inventory management, manufacturing, and project management functionality within NetSuite. 

“With an economy in transition, businesses can look to the certainty of data to find new paths to profitability and growth,” said Evan Goldberg, founder and EVP, Oracle NetSuite. “To help our customers do this, we continue to extend the capabilities of NetSuite. The latest updates span everything from financial management to HR to sales processes. They’re designed to help our customers run their business in a better way and support their growth journeys.” 

NetSuite has introduced new solutions to address the time-consuming and labor-intensive accounts payable (AP) process, grow sales, deliver a seamless buying experience for customers, improve the efficiency of warehouse operations, and adapt staffing quickly to changing business needs. 

With new automation and analytics, organizations can enhance efficiency and profitability by consolidating data, automating tasks, improving inventory management, streamlining workflows, and simplifying rebate and trade promotion program execution. 

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By Christopher Migliaccio.

The Employee Retention Credit (ERC) started out as something of a secret. Originally part of the CARES Act, the ERC was limited in 2020 and only available to organizations which did not receive Paycheck Protection Program (PPP) loans. The Consolidated Appropriations Act, approved in December 2020, retroactively removed the restriction against claiming the ERC if you had received a PPP loan (and expanded the credit in 2021). This went under the radar for many businesses.

Now, in 2022, with no PPP loan program in place, many businesses are starting to look and see if they can retroactively claim the ERC. And, for businesses who haven’t researched it themselves, there’s likely a company calling to tell them that they qualify for up to $26,000 in credits per employee. Which would be true – if the company actually qualifies for the ERC in all available periods and the employee earns at least $10,000 per quarter (discussed further below). But does everyone qualify for the ERC? With IRS audits on the rise, it’s an important question for businesses. Even companies that have claimed the ERC may want to review their documentation of qualification for the credit.

How Does an Organization Qualify for the ERC?

The ERC is a credit against payroll taxes owed by an employer on “qualified wages.”  To the extent the credit amount exceeds the amount of Social Security tax (Medicare tax for third quarter 2021) due on the wages paid, it is refundable. Businesses are eligible if they were closed (fully or partially) because of a government order related to COVID-19 or have experienced a significant decline in gross receipts. Qualification under the gross receipts test is for full quarters; qualification under the government order test is for the length of the government order. Thus, if a restriction was lifted mid-quarter, qualification ends mid-quarter.

Companies with the same or similar ownership, or that are managed by one central entity, may be required to consider their qualification together under the aggregation rules. Simply filing payroll separately does not mean an entity’s ERC qualification can be considered on its own.

How Is the ERC Calculated?

For 2020, the ERC equals 50% of each employee’s qualified wages, up to a maximum of $10,000 of wages for the year, yielding a maximum credit of $5,000 per employee. In 2021, the ERC equals 70% of each employee’s qualified wages, up to a maximum of $10,000 of wages per quarter, thus yielding a maximum credit of $7,000 per employee, per quarter. Since the ERC is available for the first three quarters of 2021, the credit is capped at $21,000 per employee. (There is limited availability of the credit in the fourth quarter of 2021 for “recovery startup businesses” – those beginning after February 15, 2020 that meet certain requirements.) However, please keep in mind that businesses which had over an average of 100 full-time employees during 2019 are only able to claim the 2020 ERC for employees who were being paid for time not worked, and those with over 500 full-time employees in 2019 are subject to the same rule for 2021.

The credit must be calculated with consideration of wages used for PPP loan forgiveness. In addition, wages have to be considered in context of other COVID-era programs, such as the Restaurant Revitalization Fund and Shuttered Venue Operators Grant, receiving other tax credits, or for non-profits, which are paid for directly by grants.

What Does It Mean to be Shut Down by a Government Order?

Qualification using a significant decline in gross receipts test is an objective measure. A business compares its gross receipts in 2020 and 2021 to corresponding quarters in 2019, using the same measure of gross receipts used on its tax return.

Less objective is the meaning of “fully or partially shut down” by a government order. The IRS has issued guidance on qualification via a government order for the ERC. The guidance has mostly been codified in Notices. While Notices do not have the full force of law, they represent the position of the IRS and will certainly be their initial guiding principles on an audit. Businesses that cannot clearly point to how their qualification complies with the Notices may face extended scrutiny, and potentially the requirement to repay the ERC, with penalties and interest.

In the early period of the pandemic (roughly March through June of 2020, although it varies by state and locality), businesses were deemed either essential or non-essential. For some businesses that were deemed not essential (or for whom a significant portion of their business was deemed not essential), and were not able to transition to working virtually, qualification can be relatively clear. Notice 2020-21 provides a four-factor test to analyze whether a business was not able to transition to telework during a period in which their workplace was closed, and thus qualifies for the ERC during that time.

However, for much of the relevant ERC time period, businesses weren’t forced to be closed, but were instead subject to restrictions on operations. If a restriction forced a change in operations in some way, does that automatically qualify a business for the ERC? There are those who would point to OSHA guidance as a catch-all to indicate business impact and qualification. But the IRS has indicated that they believe a business facing restrictions on operations only qualifies if the effect of restrictions is more than nominal, defined as 10% of a company’s ability to provide goods or services. Setting aside the question of whether 10% is “nominal,” the IRS is clearly looking for objective impacts from government orders, not simply a tweak in operations while business continued otherwise as normal, or in some cases, actually increased from pre-pandemic levels.

While some businesses have some objective measures to use (for example, a restaurant may point to capacity restrictions), many businesses do not. However, there are companies telling them they qualify regardless, without any quantifying of impacts on the business. This would be problematic if the IRS audits the business because the IRS is likely to require quantification. A business that does not have quantifiable impacts could be asked to give back the ERC credit, with penalties and interest. We believe the best practice is to ensure you can quantify the impact on your business. If there’s no way to do this, you may need to accept that your organization does not qualify for the ERC during a certain time period.

Note that just because the IRS has processed a credit does not mean that they have audited and accepted the claim. The Consolidated Appropriations Act provided five years for the IRS to go back and audit ERC claims, so there’s a long available period for them to scrutinize claims.

The Supply Chain Issue

Maybe you’ve heard that you don’t need to show an impact on your business directly; that you can rely on supply chain issues to qualify for the ERC. While the IRS guidance does discuss impact of supply chain issues as a path to qualification, this avenue is much more limited than often portrayed.

First, IRS guidance requires that for a business to qualify as being shut down based on a supply chain issue, the supply chain issue must be because of a shutdown order related to COVID-19. This can be very difficult to prove, as supply chain issues multiplied for a wide variety of reasons in 2020 and 2021.

Moreover, the supply chain issue must cause a partial shutdown of the business. This puts us right back in the discussion of whether the supply chain problem limits the ability to provide goods or services by at least 10%. Again, quantification becomes important, and any claim without that is likely to face scrutiny. It’s important not to confuse a supply chain interruption with a simple decline in the volume of business.

What if I’ve Already Gotten My Credit?

If you’re reading this and thinking that perhaps you have claimed the ERC in haste, it’s not too late to document your rationale as thoroughly as possible. Review what you have in regard to your qualification and ask yourself a few questions.

If you’re relying on a partial shutdown for qualification, did you document the specific, tangible impacts on the organization’s ability to provide goods or services? Did you quantify those impacts? If not, now is the time to build your audit file before you’re facing IRS document requests and while these issues and your documentation are still relatively fresh.


Christopher Migliaccio is principal and ERC Services Leader at PKF O’Connor Davies.

Your clients trust you to prepare their tax returns and advise them on sensitive financial topics. They also trust you with data that needs to be properly safeguarded against online criminal behavior. There are actually a lot of things that you can do to ensure that confidential data remains confidential, with many of the suggestions, such as shredding all paper documents, easily accomplished.  But there are other ways to safeguard firm data and to keep it out of the hands of criminals.

1. Install the proper safeguards

These safeguards include both anti-virus software and malware scanners. Both are designed to identify and stop threats to your computer system before they happen, and both are necessary to keep your data secure at all times.

2. Provide the necessary training to all team members

Your staff are accountants, not IT people, so they may not recognize a threat when they are presented with one. Keeping everyone up to speed on the latest threats can help keep your company data safe. A good idea is to have all employees go through some initial training as part of an employee onboarding process, with a refresher course taking place at least every six months, since threats change and evolve quickly.

3. Use complicated passwords

This goes for everyone that has access to a computer. Set parameters for passwords, such as making them a certain length. It’s also helpful to require symbols, lower case and upper-case letters, and numbers. While many of us tend to create passwords that are easily remembered, the more complicated the password, the less likely it is to be guessed by online criminals. But even a complicated password may not be enough (see #4).

4. Require multi-factor authentication on everything that requires a password

Today, it may not be enough to use a complex password. That’s why multi-factor authentication is a great idea. Multi-factor authentication requires you to input a passcode that is delivered through an outside system such as your cellphone or email. This helps identify the person attempting to access the system. On a side note, multi-factor authentication has saved me several times when hackers gained access to my apps using a stolen password. It may save you from a potentially catastrophic data breach as well.

5. Manage application accessibility

Managing application accessibility should start with the onboarding process. Remember, not every employee needs or should have access to all applications. Properly managing application access also means that terminated employees need to have their login and password privileges revoked once they leave.

There are other ways to keep your data safe from hackers, including using an online portal to communicate with your clients. A secure online portal allows you and your clients to share sensitive information, eliminating the need to share confidential documents through less secure means.  

Your clients have put your trust in you and your firm. Make sure that you’re offering the proper safeguards for keeping their data safe.