Q&A talks to Bonnie Stewart, executive director of the Connecticut Society of CPAs, about the many changes impacting the accounting industry.
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Q&A talks to Bonnie Stewart, executive director of the Connecticut Society of CPAs, about the many changes impacting the accounting industry.
Q. The National Association of State Boards of Accountancy (NASBA) and the American Institute of CPAs (AICPA) have proposed a new CPA licensure model. What can you tell us about this and what should local accountants know about it?
A. The model comprises a core of accounting, audit, tax and technology that all candidates would be required to complete — the skills deeply associated with the CPA profession.
Candidates would then pursue a discipline in which to acquire deeper skills. The three proposed disciplines are: information systems and controls; tax compliance and planning; and business reporting and analysis.
The AICPA and NASBA have worked closely with many stakeholders to determine how the model should further incorporate the changing world, especially technology. For example, fintech expands its reach daily in accounting and advisory service.
An exposure draft has been released on the exam and the comment period ends April 30, 2020.
Q. What trends are you noticing in terms of the number of accountants in the state becoming CPAs?
A. We’ve noticed the number of candidates sitting for the exam has started to decrease, perhaps in part because accounting grads are also in demand in non-public accounting organizations, i.e., ‘industry.’ The role of the accountant has expanded significantly there, and accountants need not necessarily be certified.
Candidates for certification must complete a fifth year of college. So, to a new four-year grad entering industry directly, saving that additional year of tuition may look pretty good at the time.
But both the AICPA and Robert Half put the additional income from the CPA credential at anywhere from 10 to as much as 20 percent more annually over the non-CPA in both public accounting and industry. Over a career, that missed additional income from the CPA credential can really add up, and it’s certainly something to consider.
Q. Last year, the CPA Society lobbied vigorously against a proposed tax on accounting and tax services. The proposal didn’t get passed. What impact would such a tax have and are you worried about it coming up again in 2020?
A. Frankly, it’s a fundamentally flawed concept, as people would view it as “paying a tax on paying their taxes.” Our tax code is so complex that more than half of all taxpayers use a paid preparer to ensure they’re compliant, with an additional 30% using software.
We don’t think it will come up this year, as our legislators seem to understand it’s just not good policy. We understand Connecticut’s dire financial straits, but only three states broadly tax services, and we don’t want Connecticut to become an outlier. That said, we remain vigilant.
Q. Were there any other state tax changes in 2019 that businesses should be aware as they prepare to file their taxes in 2020?
A. Pass-through entities (PTE) should be aware of modifications to their tax obligations. The PTE tax was designed to be a SALT (state and local taxes) workaround to make companies ‘whole.’ Two years into the tax, however, legislators decided to reduce the credit in an effort to gain some additional revenues for the state.
In addition, guaranteed payments from those entities are now included in the base as well.
