AICPA News – Oct. 2023

“This latest initiative by the IRS takes a multi-pronged approach to taper ERC fraud by further scrutinizing ERC claims already received, pausing the processing of additional claims, and defining processes for taxpayers to handle claims they now feel are in error. While drastic, these measures are necessary to protect small businesses by putting a stranglehold on the unscrupulous ERC practices of credit mills.

“We are pleased with the IRS’s announcement of the additional measures they are taking to push back against the dishonest credit mills taking advantage of unsuspecting small businesses. While there are still valid claims to be processed, these bold measures are necessary to combat widespread ERC fraud.”

The AICPA has provided resources and information to its members to warn their clients of red flags that could indicate that a vendor is dishonest and discourage dealings with these ERC mills. Among the warning signs, businesses should be wary of vendors that require large, contingency fees and those who fail to sign the amended payroll tax returns.

The following free resources are also available to individuals looking for additional guidance and information:

• The AICPA offers a taxpayer facing document to help taxpayers discern between fact and misconceptions surrounding the ERC: Employee Retention Credit (ERC): Fact or Fiction
• The ERC continues to be on the minds of taxpayers and practitioners. In response to practitioner requests regarding ERC “mills,” OPR provided guidance: Employee retention credit and professional responsibilities | Tax Section Odyssey
• The AICPA Professional Ethics Division walk through some questions they’re getting regarding the ERC — what’s legit and what isn’t and what could put you at risk: Hot on the hotline — ERC mills? That’s a thing? And can I send my clients to them for a fee?
• The ERC has helped many businesses struggling throughout the pandemic, but caution should be taken around firms promoting overly aggressive narratives: Reconciling ERC claims with reality | Tax Section Odyssey
• Helping eligible clients successfully apply for and receive the ERC is a once-in-a-lifetime opportunity for CPAs according to Chris Wittich, MBT, CPA: Mythbust and maximize the employee retention credit | Tax Section Odyssey
• Kris Esposito, CPA, MST, Director – AICPA Tax Policy & Advocacy, and April Walker, CPA, CGMA, Lead Manager – AICPA Tax Practice & Ethics, summarize the ERC guidance highlighted in Notice 2021-49: Employee retention credit: Your questions answered

AICPA Honors Accounting Giant, Sidney Kess, Following Passing

The American Institute of CPAs (AICPA) expressed sadness regarding the recent passing of nationally renowned tax attorney and educator, Sidney Kess, who passed away at the age of 97. Mr. Kess dedicated decades of services to the CPA profession, going above and beyond to raise the bar for CPAs who provide personal financial planning services.

Mr. Kess began volunteering with the AICPA when he created the Tax Strategies for High Income Individuals Conference more than 30 years ago. Over the years, Mr. Kess passionately highlighted the value of financial planning and spent a great deal of time reaching out to young people and encouraging them in their CPA/PFS pursuits.

In 2010, the AICPA established the Sidney Kess Award for Excellence in Continuing Education to recognize individual CPAs who have made significant and outstanding contributions in tax and financial planning and whose public service exemplifies the CPA profession’s finest values and ethics.

Throughout his life, Mr. Kess authored and co-authored hundreds of publications, courses, videos, and practice aids on income tax and financial and estate planning for the AICPA, as well as CCH software (formerly Commerce Clearing House). He has been recognized with numerous awards throughout his career, including AICPA’s Gold Medal Award, the highest award granted to a CPA by the AICPA, for his major contributions to the CPA profession, and the AICPA’s Special Recognition and Distinguished Lecturer Awards.

“The AICPA mourns the loss of Mr. Sidney Kess, His contributions in life, both professional and personal, will never be forgotten,” said AICPA president and CEO, Barry Melancon.

AICPA Endorses Key Legislation Recognizing the Link Between Accounting and STEM

The American Institute of CPAs (AICPA) has voiced its strong support for bipartisan, bicameral legislation establishing the accounting profession as a STEM career pathway and supporting long-standing efforts to diversify the future accounting workforce. In the House of Representatives, H.R. 3541, the Accounting STEM Pursuit Act of 2023 was introduced by Representatives Haley Stevens (D-MI) and Young Kim (R-CA); in the Senate, Senators Susan Collins (R-ME) and Jacky Rosen (D-NV) introduced S. 1705, the STEM Education in Accounting Act.

These bills, which would allow federal grant funding to be used for K-12 accounting education, highlight the clear and logical integration between accounting and technology and note the value of accounting professionals, including CPAs, as technological leaders.

Recognizing the increased need for technology in accounting, the AICPA, together with the National Association of State Boards of Accountancy, developed CPA Evolution – a new licensure model that focuses on building core competencies in accounting, auditing, tax, and technology while developing deeper expertise in one of three disciplines: information systems and controls; tax compliance and planning; or business analysis and reporting.

STEM recognition for accounting at the K-12 level, coupled with the potential for existing STEM K-12 federal funding to be used for accounting awareness and education, will affirm that the accounting profession is qualified to assess the technological world businesses are in today and expose diverse students to potential careers in accounting, growing the profession’s pipeline.

As the profession works to create a sustainable and robust future, finding and retaining qualified staff are consistently among the top issues facing CPA firms of every size segment and among businesses that employ accounting professionals. The profession believes that accountants who are reflective and inclusive of the communities they serve are better positioned to solve complex issues facing clients and respond to the evolving public interest.

AICPA & CIMA Introduce Career Launchpad, an AI-Guided Tool for Students Pursuing Careers in Accounting and Finance

The American Institute of CPAs (AICPA) recently released a new practice aid to help accounting professionals create a system of quality management (QM) for their firm’s accounting and auditing practice. Establishing such a system is a requirement of new AICPA QM standards, and the effective date for compliance is December 15, 2025.

As part of the QM suite of standards, the Statement on Quality Management Standards (SQMS) No. 1, A Firm’s System of Quality Management,requires firms to apply a risk-based approach in designing, implementing, and operating a quality management system. In doing so, firms need to consider the unique nature of both their firm and their engagements. The free practice aid, Establishing and Maintaining a System of Quality Management for a CPA Firm’s Accounting and Auditing Practice, explains how to apply a such a risk-based approach, as well as how to customize it to individual firms. The document is available in versions for sole practitioners and for small- and medium-sized firms.

The practice aid is among numerous resources the AICPA provides to help firms successfully implement the QM standards. Practitioners can visit the quality management resource page where they can find tools like the crosswalk document that summarizes the changes in SQMS No. 1 when compared to the prior quality control standard.

The new, interactive practice aid is intended to work in tandem with the Example Risk Assessment template, which provides a starting point for each component and a library of quality risks and responses. Firms can use these tools to identify the quality risks to their practice and the appropriate responses to those risks.

Practitioners can download the appropriate version of the practice aid here.