Your phone’s already ringing. Clients want to know how the new tax law will impact them. This is understandable, but don’t worry if you aren’t ready to answer their questions just yet It’s a big law and the IRS has yet to provide even the most basic guidance. For most businesses, taxes aren’t the first thing to look at in 2018—in fact, taxes probably shouldn’t be your clients’ second or even third priority. During your client meetings consider tackling these other issues that haven’t made the 6 o’clock news.
- Everybody needs to fully reevaluate their accounting.
To start with, after two years of delays, US GAAP is undergoing its biggest changes in decades with implementation of FASB’s new revenue recognition and lease accounting standards. Aside from the high-profile changes for software providers, virtually every business in America that reports under US GAAP will see significant changes to their accounting for revenue recognition. Most of these businesses have leases to look at too.
Particularly if you have clients in the real estate, construction or non-profit sectors, they’ve got some serious work ahead to revamp their accounting. Contracts, leases and legal structures of pass-through entities all need to be examined. If you need help, we have 16 industry-specific task forces that have been studying these issues for the past three and a half years.
The accounting changes alone are enough to make it worthwhile for many small businesses to consider whether to continue reporting under US GAAP or change to a less complex financial reporting framework such as the cash-basis, tax-basis, regulatory-basis, or other comprehensive bases of accounting (OCBOA) such as the Financial Reporting Framework for SMEs. Now, with the tax code overhaul, it’s even more critical that small businesses take a step back and reevaluate their entire approach.
- It’s time for major back-office system changes—or outsourcing.
For businesses that have continued using labor-intensive processes for back-office functions such as billing, payroll and financial reporting based on an “if it ain’t broke, don’t fix it” mindset, 2018 will be the year it breaks. You want to be there to help them fix it.
It is unlikely that you will find a system that can accommodate implementing multiple major financial standards or an entirely different accounting framework without a major overhaul or replacement. As CPAs, we can help clients navigate this upset to business as usual.
During the tax season rush, we often get so busy that we forget to bring up other service offerings. Or we’ve talked about these offerings and clients simply weren’t ready. This year—2018—I fully expect more clients than ever will be ready to make major system changes. We can present viable options that may include selecting and transitioning to a new basis of accounting, outsourcing (not just bookkeeping but also CFO services), cloud-based accounting software, and restructuring contracts and leases.
- This year cybersecurity should be integrated into everything.
We keep hearing it in the news, but we as CPAs need to do more to protect ourselves and our clients. Most businesses—especially small businesses—aren’t doing enough to protect themselves and their customers from cyberattacks.
The necessary upgrades to financial systems brought on by changes in accounting standards and the tax code present both new risks and new opportunities for cybersecurity. The point I want to emphasize is that cybersecurity shouldn’t be “another thing to look at”—it should be part of everything we look at. Even if cybersecurity isn’t your specialty, don’t miss the opportunity to raise your clients’ awareness. The Private Companies Practice Section has a toolkit that will help you get started.
If you don’t have in-house expertise, consider partnering with another CPA firm that can help your clients assess and mitigate their cybersecurity risk and, when appropriate, consider assurance services on their cybersecurity risk management program. The AICPA’s cybersecurity risk management reporting framework helps organizations communicate about the effectiveness of the programs they have in place. Visit the SOC for Cybersecurity webpage for more information.
And about tax reform….
Yes, of course it’s a big deal and will be for the next few years. But we can’t look at tax reform in isolation, and we can’t address every tax issue at once. Major changes to the tax code present us as CPAs with a unique opportunity to demonstrate to clients the value of having a trusted advisor who understands their whole business. We can help them prepare for long-term growth. Small firms can find a wealth of tools that can help them achieve their goals on the AICPA small firm resources site.
Carl Petersen, Vice President – Small Firm Interests—Public Accounting
Small firm priorities courtesy of Shutterstock.
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Originally published by AICPA.org